Final answer:
Sam is operating his business as a Sole Proprietorship, which means it is owned and operated by one person, without any formal legal entities like a corporation or partnership. The owner bears all profits, debts, and legal responsibilities. This structure is common for individual endeavors, straightforward to manage, and does not require the complex processes of incorporation or partnership agreements.
Step-by-step explanation:
Based on the scenario where Sam writes up a business plan, gets a bank loan, and starts renting a storefront, the main answer to the question of what type of business structure Sam is operating under is e. Sole Proprietorship. Sam's actions describe a business model where an individual has decided to start a business on their own, without mentioning any partners or incorporation processes. This indicates that Sam has not formed a corporation, partnership, or company with limited liability features.A sole proprietorship is the simplest and most common form of business structure, which is characterized by being owned and operated by one person. The owner is entitled to all profits but is also responsible for all debts, liabilities, and legal actions against the business. This form of business is easy to establish and manage, but the significant disadvantage is the unlimited liability Sam would have, meaning personal assets could be at risk if the business incurs debt or legal issues.In a sole proprietorship, the proprietor has the autonomy to make all decisions and has the opportunity to keep all profits, however, they also assume all the risks associated with the business. This type of structure is suitable for those who want to be their own boss and are willing to handle all aspects of the business, including the possibility of acquiring capital through loans as Sam has done.