Which business form is a single-owner operation with no separate legal entity?

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Ownership structure and legal status determine whether a business is a sole proprietorship. When there is a single owner and no separate legal entity is formed for the business, the arrangement is a sole proprietorship. The owner and the business are legally the same, so profits and losses flow directly to the owner's personal tax return, and the owner bears personal liability for debts and obligations. The other common forms all create some level of separate legal entity: a C corporation is a distinct entity owned by shareholders; a partnership involves two or more owners; a limited liability company is also a separate entity, even if it has just one member in some cases. This is why the single-owner, no-separate-entity setup best fits sole proprietorship.