Name two forms of business organization that offer limited liability to owners.

• A. Limited liability company (LLC) and corporation (including C corporations and S corporations).
• B. Sole proprietorship and general partnership.
• C. Cooperative and mutual association.
• D. Nonprofit organization and sole trader.

Answer: (A)

Limited liability protects owners’ personal assets from business debts. Two forms that consistently provide this protection are corporations and limited liability companies. In a corporation, shareholders’ liability is limited to the amount they invested, so personal assets aren’t at risk for corporate debts. In an LLC, members enjoy a similar protection, with personal assets shielded while the business operates. The other options involve structures where owners typically bear personal responsibility for debts: a sole proprietorship and a general partnership expose owners to personal liability. Cooperatives, mutual associations, and nonprofit organizations are not designed primarily to offer broad personal-liability protection in the way corporations and LLCs do.