What type of business is owned by a single individual with unlimited liability?

The correct answer is a sole trader, which refers to a business type owned and run by a single person. This structure is characterized by its simplicity, where the owner has complete control over the business and receives all profits. However, the owner also bears unlimited liability, meaning that they are personally responsible for any debts incurred by the business. If the business faces financial difficulties, creditors can claim the owner's personal assets to settle business debts. This level of personal risk is a significant aspect of being a sole trader.

In contrast, a corporation, partnership, and limited company have different ownership structures and liability terms. Corporations are separate legal entities that protect owners (shareholders) from personal liability. Partnerships involve two or more individuals who share ownership, and while they may have some personal liability, it is usually shared depending on the partnership structure. Limited companies, similarly to corporations, provide limited liability protection to their owners, shielding personal assets from business debts.