Which of the following statements about a sole proprietorship is correct?

A sole proprietorship is indeed characterized by being owned and operated by a single individual, with no legal distinction between the owner and the business itself. This means that the owner is personally liable for all debts and obligations of the business. Any income generated by the sole proprietorship is reported on the owner's personal tax return, further emphasizing the unity between the individual and the business entity. The simplicity of this structure makes sole proprietorships popular among small business owners who may want to operate a business with minimal formalities and regulatory requirements.

The other statements do not accurately represent the nature of a sole proprietorship. For instance, a sole proprietorship does not require more than one owner, nor does it necessitate formal registration with the state, although certain permits or licenses may be needed depending on the type of business. Lastly, the tax liabilities associated with a sole proprietorship are handled through the owner's personal tax return, meaning that the owner personally bears the tax burdens rather than the business entity itself.