What is a key feature of an incorporated company?

• A. It is taxed differently
• B. It has unlimited liability
• C. It is a separate legal entity from its owners
• D. It cannot raise capital

Answer: (C)

The main point here is the separate legal personality of an incorporated company. Because the company is treated by law as its own person, it can own assets, enter into contracts, sue and be sued in its own name, and it can continue even if ownership changes. This separation also means owners have limited liability—their personal assets aren’t at risk for the company’s debts beyond what they’ve invested. That combination of legal personality, ongoing existence, and limited liability is what distinguishes an incorporated company from other business forms. So the best description is that it is a separate legal entity from its owners.