Which of the following best describes a characteristic of a sole proprietorship?

A sole proprietorship is characterized by the fact that the owner is entitled to all the profits generated by the business but also faces unlimited liability. This means that if the business incurs debt or is sued, the owner's personal assets can be at risk. This distinct feature is critical to understanding how a sole proprietorship operates, as it underscores the significant responsibility and financial risk taken on by the owner.

In contrast, other business structures, such as partnerships or corporations, involve shared control or limited liability protections that shield personal assets. The absence of a governing body, like a board of directors, highlights the sole proprietor's autonomy in decision-making, further emphasizing the personal stakes involved in running the business. This means that while all profits go directly to the owner, the potential for greater financial risk is a salient aspect of this type of business entity.