Which form of business is a legal entity separate from its owners, offering limited liability?

• A. Sole Proprietorship
• B. Partnership
• C. Corporation
• D. LLC

Answer: (C)

A corporation is a business form that exists as its own legal person, separate from the people who own it, and it provides limited liability to its owners. This separation means the company can own property, enter contracts, sue and be sued, and continue regardless of changes in ownership. Shareholders’ liability is typically limited to the amount they invested, protecting their personal assets from the company’s debts or obligations. Other forms don’t fit this combination as clearly: a sole proprietorship has no separate legal status and the owner is personally liable for debts; a general partnership similarly exposes partners to personal liability; while a limited liability company also offers a separate legal existence and limited liability, the question’s classic example and the most widely recognized illustration of this concept is the corporation.