Which type of business organization limits the personal liability of owners?

A corporation is a type of business organization that provides limited liability protection to its owners, known as shareholders. This means that the personal assets of the shareholders are generally protected from the debts and liabilities of the corporation. If the corporation faces lawsuits or financial difficulties, the shareholders typically are only at risk for the amount they have invested in the corporation and are not personally responsible for any additional debts.

This feature of limited liability is one of the primary reasons many individuals choose to form corporations. It allows for adequate separation between the business entity and the personal finances of its owners, encouraging investment by reducing individual risk. In contrast, sole proprietorships and general partnerships expose their owners to unlimited personal liability, meaning personal assets can be at stake in case of business debts or legal judgments. While limited partnerships do limit the liability of certain partners, not all partners enjoy this protection, leading to a different level of liability altogether. Therefore, a corporation stands out as the correct answer because it consistently provides comprehensive limited liability for all its owners.