Which of the following business types offers limited liability to its shareholders?

A C corporation is recognized as a separate legal entity from its owners, which allows it to provide limited liability protection to its shareholders. This means that the personal assets of the shareholders are generally protected from claims against the corporation, such as debts or legal actions taken against the business. If the corporation faces financial difficulties or lawsuits, only the assets of the corporation are at risk, not the personal assets of its shareholders.

This limited liability feature encourages investment because shareholders can participate in the ownership of the corporation without risking their personal wealth. In contrast, other business structures like sole proprietorships and general partnerships do not provide this level of protection, as the owners are personally liable for the debts and obligations of the business. A limited liability company (LLC) also offers limited liability but is distinct from a C corporation in terms of formation, tax treatment, and regulatory requirements. However, the question specifically asked about the business type that offers limited liability, which in the context of established corporations is primarily the C corporation.