Which business form commonly has perpetual existence and separate legal personality?

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

Answer: (D)

The key idea is that some business forms are separate legal entities with the ability to continue indefinitely beyond the lives or involvement of their owners. A corporation is created as a distinct legal person from its owners, so it can own assets, enter contracts, sue and be sued in its own name. Because ownership is held in shares and can be transferred without dissolving the entity, a corporation can exist perpetually, regardless of changes in who owns or runs it.

In contrast, a sole proprietorship has no separate legal identity—the business and owner are one, so it ends if the owner dies or stops operating. A general partnership typically dissolves when a partner leaves or dies, and partners may bear personal liability. An LLC does have separate personality and limited liability, and it can have a long life, but the hallmark form known for perpetual existence is the corporation.