What is a characteristic of a sole proprietorship?

A sole proprietorship is indeed easy to establish and operate, primarily because it does not require complex formation procedures like those found in corporations or partnerships. This simplicity in acquiring and managing such a business structure appeals to many individuals. However, the high-risk aspect stems from the personal liability that the owner assumes for all the business's debts and obligations. Unlike other business structures, where liability is limited, a sole proprietor's personal assets can be at risk if the business fails or faces legal issues.

The other choices highlight characteristics not associated with sole proprietorships. For instance, requiring multiple partners refers to partnerships, which involve at least two individuals sharing ownership and responsibility. Limited liability is characteristic of corporations and limited liability companies (LLCs), where owners are protected from personal liability regarding the company's debts. Finally, mandatory audits are not a requirement for sole proprietorships; they are typically more applicable to larger entities or those in certain regulated industries.