What type of business entity offers limited liability but may require more formalities than an LLC?

Incorporated businesses, such as corporations, are recognized as distinct legal entities separate from their owners. This separation provides shareholders with limited liability, meaning their personal assets are generally protected from business debts and legal actions against the corporation.

Incorporated businesses are subject to more formalities compared to Limited Liability Companies (LLCs). For instance, they must adhere to specific regulations, including holding regular meetings, maintaining accurate minutes, and adhering to strict procedural rules when it comes to issuing shares and making corporate decisions. Additionally, corporations often have more regulatory requirements at both state and federal levels, which adds complexity to their formation and operation.

In contrast, LLCs provide limited liability protection with fewer formalities, making them more flexible in terms of management and operation. Other business entities, such as sole proprietorships and general partnerships, do not offer limited liability, while limited partnerships have certain characteristics that differentiate them from fully incorporated businesses without the extensive formal requirements. Thus, incorporated businesses represent the correct answer as they combine limited liability with greater formal structuring requirements.