Which business organization has a separate legal entity from its owners?

Which business organization has a separate legal entity from its owners?

• A. Mutual organisation
• B. Limited company
• C. Partnership
• D. Online business

Answer: (B)

The main idea is legal personality: the business is treated as its own separate entity in law, distinct from the people who own it. A limited company has this status by default. It is created as a separate legal person, so it can own assets, enter into contracts, borrow money, and sue or be sued in its own name. The owners (shareholders) are protected because their liability is limited to the amount they have invested, meaning their personal assets aren’t at risk for the company’s debts. This separation of ownership and legal existence is what sets a limited company apart from other forms. Mutual organisations can be separate legal entities if they’re incorporated, but that isn’t guaranteed and isn’t as universally defined as it is for a limited company. Partnerships, on the other hand, do not have a separate legal identity from the partners; the partners are personally liable for debts. An online business isn’t tied to a single legal form and could be set up in various ways, so it doesn’t inherently ensure separate legal personality.

The main idea is legal personality: the business is treated as its own separate entity in law, distinct from the people who own it. A limited company has this status by default. It is created as a separate legal person, so it can own assets, enter into contracts, borrow money, and sue or be sued in its own name. The owners (shareholders) are protected because their liability is limited to the amount they have invested, meaning their personal assets aren’t at risk for the company’s debts. This separation of ownership and legal existence is what sets a limited company apart from other forms.

Mutual organisations can be separate legal entities if they’re incorporated, but that isn’t guaranteed and isn’t as universally defined as it is for a limited company. Partnerships, on the other hand, do not have a separate legal identity from the partners; the partners are personally liable for debts. An online business isn’t tied to a single legal form and could be set up in various ways, so it doesn’t inherently ensure separate legal personality.