Which business structure limits owner liabilities to their investment in the entity?

A limited liability company (LLC) is a business structure that distinctly limits the owners' liabilities to their investment within the entity. This means that, unlike sole proprietorships, general partnerships, or cooperatives, the personal assets of the members (owners) are generally protected from business debts and liabilities. In the event that the LLC incurs debts or faces legal judgments, the members are only liable for the amount they have invested in the business and cannot have their personal assets seized to satisfy business obligations.

This protection is a significant advantage of forming an LLC and is one of the primary reasons entrepreneurs choose this structure over others that do not offer the same degree of liability protection. In contrast, a sole proprietorship exposes the owner to full personal liability for all business debts, while a general partnership similarly holds partners jointly and individually liable. Cooperatives, while offering some benefits, do not inherently provide the same limited liability protection as an LLC. Thus, the structure of an LLC is designed specifically to limit owner liabilities, making it the correct choice in this scenario.