Final answer:
Limited liability is closely associated with corporations, protecting shareholders from losing more than their investment in the company, unlike other business structures where personal assets might be at risk.
Step-by-step explanation:
Advantages of a Corporation in Business Structures
Limited liability is a significant advantage primarily associated with Option 1: corporation. This is because a corporation is a legal entity that is separate from its owners, providing protection from personal liability. If a corporation encounters debt or legal issues, the shareholders' responsibility is usually limited to the amount they have invested. Hence, individual assets of the owners are generally not at risk.
In contrast, sole proprietorships and partnerships can involve significant personal liability, potentially affecting the personal assets of the owners. For nonprofit firms, while they do have limited liability, their purpose and funding structures differ significantly from those of a corporation.
Corporations offer other benefits over different business structures, such as ease of raising capital through the sale of stock or issuing bonds, the ability to sue and be sued, the potential for an unlimited lifespan, and relative ease of transferring ownership.