Which of the following is not true of a sole proprietorship?

The statement that is not true of a sole proprietorship is: "It has a separate legal entity". A sole proprietorship is a type of business structure in which an individual owns and operates the business. Unlike a company, a sole proprietorship does not have a separate legal entity from its owner. This means that the owner is personally liable for all debts and obligations of the business, and their personal assets are at risk in case of business liabilities. The other statements are true characteristics of a sole proprietorship, including unlimited liability, small capital, and the potential to convert into a company. However, the chances of expansion may vary depending on the individual owner's capacity and business strategies.