When creating a legal structure for your small business, which of the following forms of business organization offers limited liability protection to its owners?

• A. Partnership
• B. Corporation
• C. Sole proprietorship
• D. General partnership

Answer: (B)

Verified step by step guidance

1. Understand the concept of limited liability protection: Limited liability means that the owners of a business are not personally responsible for the debts and liabilities of the business. Their personal assets are protected, and only the business's assets can be used to settle debts.
2. Review the characteristics of each business structure: A sole proprietorship and general partnership do not offer limited liability protection. In these structures, the owners are personally liable for the business's debts.
3. Analyze the corporation structure: A corporation is a separate legal entity from its owners (shareholders). It provides limited liability protection, meaning the shareholders are not personally liable for the corporation's debts or legal obligations.
4. Compare the options provided in the question: Partnership, Sole Proprietorship, General Partnership, and Corporation. Identify which structure aligns with the concept of limited liability protection.
5. Conclude that the correct answer is 'Corporation,' as it is the only form of business organization among the options that offers limited liability protection to its owners.