Final answer:
A corporation is the type of business treated as its own legal entity, offering liability protection to its owners and the ability to raise capital through stock.
Step-by-step explanation:
The type of business that is treated as its own legal entity is a corporation. Unlike sole proprietorships and partnerships, where the business and the owners are legally the same, a corporation is a formal structure that exists independently of its owners. By incorporating, the business can issue stock, raise funds, and is held accountable for its actions, shielding the individual owners from personal liability for the company's debts and other obligations.
Corporations have the unique ability to exist perpetually and to be owned by shareholders, who can transfer their ownership through the sale of stock without affecting the corporation's continued operation or existence. This structure encourages investments and provides a mechanism for accumulating capital.
Choosing the right business structure depends on several factors, including desire for control, willingness to assume personal risk, tax implications, and the need to raise capital.