Final answer:
A corporation is the business entity formed under state law that has a separate legal identity from its owners.
Step-by-step explanation:
The business entity formed under state law that has a separate legal identity from its owners is a corporation.
Unlike a sole proprietorship or a partnership, a corporation is a separate legal entity, meaning that it has its own legal rights and responsibilities. The owners of a corporation, known as shareholders, have limited liability for the debts and obligations of the corporation. This means that their personal assets are generally protected from business liabilities.
For example, if a corporation goes bankrupt and cannot pay its debts, the shareholders are not personally responsible for covering those debts. In addition, a corporation can sell shares of stock to raise funds, which allows for greater access to capital and potential for growth.