Final answer:
A corporation is the type of business owned by shareholders and formed under legal guidelines, as opposed to sole proprietorships, partnerships, cooperatives, or franchises.
Step-by-step explanation:
The type of business that is owned by shareholders and formed under legal guidelines is a corporation. This business structure is formal and requires permission from national and state governments to incorporate. Once incorporated, a company may choose to become public by selling shares to raise revenue, transitioning into a public company, or it may remain a private company.
A corporation differs from other business types like a sole proprietorship, which is owned by one individual and is not a separate legal entity, or a partnership, which is owned and run by a group. Cooperatives are unique as they are owned and operated by their members, and franchises operate under a parent company's trademark and business model.