What type of business structure allows for multiple owners but limits personal liability?

The correct answer is a Limited Liability Company (LLC), which is designed to provide business owners with the benefits of both a corporation and a partnership or sole proprietorship. An LLC allows multiple owners—referred to as members—to participate in the business while safeguarding their personal assets from business debts and liabilities. This means that if the business were to incur debt or face legal issues, the personal assets of the members, such as their homes and personal savings, typically cannot be pursued to settle those business-related obligations.

In contrast, a sole proprietorship only allows for one owner, who has unlimited personal liability for any business debts. Similarly, a general partnership involves two or more owners who share unlimited liability, meaning each partner is personally responsible for the debts of the business. A limited partnership includes both general and limited partners; while limited partners have their liability restricted to their investment in the business, general partners still face unlimited liability. Thus, the LLC stands out as the structure specifically designed to limit personal liability while accommodating multiple owners.