Which type of business organization is a separate legal entity?

• A. Sole/Single Proprietorship
• B. Partnership
• C. Corporation
• D. Cooperative

Answer: (C)

The distinguishing idea here is legal personality separate from the owners. A corporation is created as a distinct legal entity that can own property, enter into contracts, sue and be sued in its own name, and continue to exist regardless of changes in ownership. This separation also gives shareholders limited liability—their risk is limited to their investment in the company, not their personal assets.

In contrast, a sole proprietorship has no separate legal identity between the owner and the business, so the owner is personally liable for debts and obligations and the business typically ends if the owner leaves. A general partnership likewise lacks a separate legal personality, with partners usually personally liable for the partnership’s obligations. A cooperative is owned by its members and can be a separate legal entity when incorporated, but the form most clearly defined by and distinguished by separate legal personality is the corporation.