Which term describes an individual who operates a business and is legally identical to it?

The correct term that describes an individual who operates a business and is legally identical to it is "Sole Trader." In this business structure, the owner and the business are seen as one legal entity. This means that the individual is personally responsible for all debts and liabilities incurred by the business. The simplicity of this structure allows for easy setup, minimal regulatory requirements, and full control over business decisions by the owner.

This contrasts with other options. A partnership involves two or more individuals who share ownership and responsibilities, but it still maintains a separate legal entity status. In a corporation, the business is a separate legal entity that protects the owners' personal assets from business liabilities. A limited liability company (LLC) combines aspects of both partnerships and corporations, providing limited liability protection to its owners while maintaining a separate legal identity.

Thus, the defining characteristic of a sole trader is the legal identity being merged with that of the business, which directly leads to the responsibility for business obligations falling on the individual proprietor.