A limited company is described as:

• A. A business that is unincorporated
• B. A separate legal entity from its owners
• C. A partnership with limited risk
• D. A nonprofit entity

Answer: (B)

A limited company is characterized as a separate legal entity from its owners, meaning it has its own rights and responsibilities under the law. This distinction provides the owners, also known as shareholders, with limited liability, which means that their personal assets are protected in the event that the company incurs debt or faces legal action. The company itself can own property, enter into contracts, and be liable for its obligations, independent of its shareholders.

This legal separation is crucial because it allows the company to operate independently while also providing a cushion of protection for the personal finances of the shareholders. If the company fails, they would only lose the money they invested in the company, rather than putting their personal assets at risk.

In contrast, the other options do not accurately define a limited company. An unincorporated business lacks the legal status of a separate entity, and a partnership with limited risk would typically refer to a different structure, such as a limited partnership. A nonprofit entity is another type of organization altogether, primarily focused on serving a social cause rather than generating profit for shareholders.