Which term best describes the legal entity that can be considered separate from its owners?

The term that best describes a legal entity considered separate from its owners is a corporation. A corporation is a distinct legal body that can own property, enter into contracts, and be sued or sue in its own name, independent of its shareholders or owners. This characteristic enables the corporation to limit the personal liability of its owners, meaning that their personal assets are generally protected from the corporation's debts and obligations.

In contrast, a partnership is an arrangement where two or more individuals share ownership and personal liability, which means the owners are personally responsible for the debts of the business. A sole proprietorship, owned by a single individual, does not create a legal distinction between the owner and the business, resulting in unlimited personal liability. Nonprofit organizations, while also functioning as separate legal entities, are primarily established for public benefit rather than profit, and they have specific regulations governing their operations.

The fundamental distinction of a corporation is its ability to operate independently of the individuals who contribute capital to it, which makes it the best answer to the question regarding a legal entity separate from its owners.