Final answer:
Ed Smith may legally conduct business under the trade name 'Ed Knows Real Estate' or any other name he chooses, following local registration requirements. As a sole proprietor, he has full control and responsibility for the business, but also bears all risks personally.
Step-by-step explanation:
Ed Smith, as a sole proprietor using the trade name "Ed Knows Real Estate," may legally conduct business under that trade name or any other name he chooses, provided he complies with the local business registration and naming laws. Typically, this involves registering the trade name, also known as a 'doing business as' or DBA name, with the appropriate government body. This ensures that he is legally recognized for performing business under that name and that it's not misleading or already in use by another company.
The structure of a sole proprietorship is such that the owner is personally responsible for all aspects of the business, including debts and liabilities. The primary advantage of this structure is the simplicity of setting up and managing the business, with all profits belonging to the owner.
Conversely, the main disadvantage is the lack of liability protection, which could put the owner's personal assets at risk. If Ed were to expand his business and seek additional protection or resources, he might consider forming a partnership or a corporation.