What best describes a sole trader?

A sole trader is best described as a person owning and running an unincorporated business. This means that the individual operates the business on their own and is personally responsible for all aspects of it, including profits, losses, and liabilities. There is no legal distinction between the owner and the business; hence, the owner's personal assets can be at risk if the business incurs debt or faces legal issues.

In contrast to other business structures, like corporations or partnerships, a sole trader has an uncomplicated setup regarding formation and taxation. They enjoy complete control over the business decisions and retain all the profits after tax is paid, but they also bear all risks personally. This reflects the fundamental characteristic of a sole trader as an individual exercise of entrepreneurship, without the formal incorporation of the business entity.

The other options describe different business structures: Option A refers to a partnership or corporate entity, where multiple individuals collaborate and share management responsibilities; Option B implies incorporation, which provides a legal separation between the owner and the business hence does not fit the definition of a sole trader; and Option D describes a limited liability partnership, which again differs fundamentally from the sole trader structure.