How are profits distributed in a sole proprietorship?

In a sole proprietorship, profits are directly attributed to the owner, meaning that all earnings generated by the business belong to them. The owner has the discretion to reinvest profits back into the business or withdraw them for personal use. This structure allows for simple tax treatment, as profits are typically reported on the owner's personal income tax return, avoiding double taxation. However, the owner also bears all financial risks and liabilities associated with the business.