Which of the following entities provide personal liability protection to their owners/partners/shareholders?

LLC
S-Corporation
Sole Proprietorship
C-Corporation

Question

Which of the following entities provide personal liability protection to their owners/partners/shareholders?

LLC
S-Corporation
Sole Proprietorship
C-Corporation

BlackTom AI · Accepted Answer

Exploring the question, we’re assessing which business forms provide personal liability protection for owners, partners, or shareholders.
Option 1: '1 and 3' corresponds to LLC and Sole Proprietorship. LLC does offer limited liability protection, shielding owners' personal assets from business debts, but Sole Proprietorship does not—there is no separation between owner and business, so personal liability remains. This makes this option partially correct and overall incorrect as stated.
Option 2: '3 only' would mean Sole Proprietorship is the sole entity with liability protection. As noted, a sole proprietorship offers no personal liability protection, so this option is factually false.
Option 3: '1, 2 and 4' includes LLC (1), S-Corporation (2), and C-Corporation (4). All three provide some form of personal liability protection to owners, partners, or shareholders: LLCs shield members, S-Corps protect shareholders from personal liability in most cases, and C-Corps provide liability protection for shareholders as a separate legal entity from the owners. This option aligns with the core principle of corporate structures offering limited liability.
Option 4: '2 and 4' lists S-Corporation and C-Corporation. While both do offer personal liability protection, this choice omits LLC, which also provides such protection. Therefore, this option is incomplete.
Option 5: '1 only' asserts only the LLC provides protection. This ignores the liability protection afforded to S-Corporations and C-Corporations, making it incorrect.
In summary, the reasoning shows that only the combination including LLC, S-Corp, and C-Corp accurately reflects entities with personal liability protection, while including or excluding certain items leads to inaccuracies. The correct grouping is represented by option 3 in the provided list, which corresponds to '1, 2 and 4'.

Which of the following entities provide personal liability protection to their owners/partners/shareholders? LLC S-Corporation Sole Proprietorship C-Corporation

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