Which business structure provides limited personal liability for owners?

Which business structure provides limited personal liability for owners?

• A. Partnership
• B. Mutual organisation
• C. Limited liability
• D. Franchise

Answer: (C)

The main idea is that some business structures limit what owners have to pay if the business runs into trouble. Limited liability means owners’ personal assets are protected—their potential loss is limited to what they’ve invested in the business. This protection comes from the business being a separate legal entity, like a limited company, where debts are owed by the company, not by the individuals. That’s why this option fits best. In a partnership, generally each partner can be personally liable for business debts, so personal assets could be at risk. A mutual organisation is owned by its members and focuses on mutual benefits rather than a clear liability rule for owners. A franchise is a model that can be run under different legal forms, and whether liability is limited depends on the chosen legal structure, not on the franchise model itself.

The main idea is that some business structures limit what owners have to pay if the business runs into trouble. Limited liability means owners’ personal assets are protected—their potential loss is limited to what they’ve invested in the business. This protection comes from the business being a separate legal entity, like a limited company, where debts are owed by the company, not by the individuals.

That’s why this option fits best. In a partnership, generally each partner can be personally liable for business debts, so personal assets could be at risk. A mutual organisation is owned by its members and focuses on mutual benefits rather than a clear liability rule for owners. A franchise is a model that can be run under different legal forms, and whether liability is limited depends on the chosen legal structure, not on the franchise model itself.