ACCA Corporate and Business Law (F4) Certification Practice Exam 2025 – Your All-in-One Guide to Success!

A sole trader is defined as a business that is owned and operated by a single individual. This structure allows the owner to have complete control over all aspects of the business, including decision-making and management. The sole trader enjoys the benefit of keeping all profits generated by the business, but they are also personally liable for any debts incurred by the business. This means that there is no legal distinction between the owner and the business itself, which can be advantageous for simplicity but poses risks in terms of liability.

In contrast, the other options describe different business structures. For example, a company with limited liability refers to a distinct legal entity where the owners’ liabilities are limited to their investment in the company, leading to personal asset protection. A partnership involves two or more individuals who share the management and profits of the business, while a cooperative is an organization owned and operated by a group of individuals for their mutual benefit. Each of these alternatives represents a different approach to business operation and liability, which further emphasizes the unique characteristics of a sole trader structure.