Identify a key characteristic of a sole proprietorship.

A key characteristic of a sole proprietorship is unlimited liability for the owner. In this type of business structure, the owner is personally responsible for all of the business's debts and obligations. This means that if the business incurs debt or faces legal issues, the owner's personal assets, such as their home or savings, could be at risk.

This characteristic is crucial for understanding the implications of choosing a sole proprietorship over other business structures, like corporations or limited liability companies, which provide protection for personal assets. The unlimited liability feature emphasizes the level of risk the owner assumes when operating a sole proprietorship, making it important for potential business owners to consider their financial position and the possible impacts of business failure on their personal finances. Additionally, other types of business structures often limit the owner's liability to the amount they have invested in the business, thereby offering more protection.