Which business form typically provides limited liability for owners?

• A. Sole Proprietorship
• B. General Partnership
• C. Limited Liability Partnership
• D. Corporation

Answer: (D)

Limited liability is a defining feature of a corporation: it creates a separate legal entity whose owners’ liability is limited to their investment in the company. This separation means personal assets are generally protected from the business’s debts or lawsuits, so creditors can pursue only the corporation’s assets, not the owners’ personal property. This protection is not typical for a sole proprietorship or a general partnership, where owners can be personally liable for business obligations. A limited liability partnership can offer protection, but its availability and scope vary by jurisdiction and structure, making it less universally reliable for all owner protections. Because of its broad and consistent protection, the corporate form is the standard way to ensure owners have limited liability.