Final answer:
Ed Smith, as a sole proprietor, may conduct business legally under his registered trade name 'Ed Knows Real Estate' or his legal name, assuming he has complied with local laws for name registration.
Step-by-step explanation:
Ed Smith is a sole proprietor operating under the trade name "Ed Knows Real Estate." In the context of a sole proprietorship, a business owner can legally conduct business under their legal name or any trade name they have registered for their business. Since in this case the owner has a trade name, Ed may legally conduct business under the trade name "Ed Knows Real Estate."
As a sole proprietor, Ed is personally responsible for any legal contracts and obligations relating to the business, including debts and liabilities. Moreover, he enjoys all profits the business makes. The business and the owner are not separate legal entities; therefore, the right to enter into contracts is based on property ownership. For Ed, his property is the proprietorship – which in this instance includes both his name and the trade name under which he is doing business.
It is important that Ed complies with any applicable local laws concerning registering a business name, which often includes filing a 'Doing Business As' (DBA) registration if the trade name is different from his legal name. This allows him to open bank accounts, enter into contractual agreements, and perform other business-related activities under the trade name.