In a sole proprietorship, the decisions are made by the ______

1. Analyze the question The question asks who makes decisions in a sole proprietorship. The key word is "sole," meaning one person.

2. Explain the concept A sole proprietorship is a business owned, managed, and controlled by one person. Its main features are:

• One person provides the capital and takes the profits.
• The owner bears unlimited liability, meaning personal assets can be used to pay the business's debts.
• The owner takes the major decisions, such as what to sell, how much to produce, and whom to employ.
• It is easy to set up and has little legal formality. Examples include a roadside provision shop, a tailor, or a small hair salon.

3. Work through the options

• A. Government: Government makes decisions in public enterprises (state-owned businesses), not in a privately owned one-person business. ✗
• B. Management: A separate management team is typical of larger firms where ownership and control are separated, such as public limited companies. In a sole proprietorship the owner is the manager. ✗
• C. Owner: The owner controls the business and makes the decisions. ✓
• D. Board of Directors: Boards belong to companies (limited liability companies), where they act for the shareholders. A sole proprietorship has no board. ✗

4. Answer The decisions are made by the owner, which is option C.

5. Exam tip Link the type of business to its decision-maker:

• Sole proprietorship → Owner
• Partnership → Partners
• Limited company → Board of Directors
• Public enterprise → Government

"Sole" means "one," so one person decides.