Incorporating a business allows it to attain which type of legal status?

Incorporating a business establishes it as a distinct legal entity, which is characterized by corporate status. This means that the corporation has its own legal identity separate from its owners (the shareholders). This separation provides several benefits, including limited liability for shareholders, which protects their personal assets from the debts and liabilities of the corporation. Furthermore, a corporation can enter into contracts, sue, and be sued in its own name.

This legal status as a corporation also allows for easier capital raising through the issuance of shares and can enhance credibility with customers, suppliers, and potential investors. In contrast, the other options—partnership, proprietorship, and franchise—do not create an independent legal entity. A partnership involves two or more individuals sharing profits and liabilities, a proprietorship is a sole business operated by one individual without the separate legal status of a corporation, and a franchise is a method of distributing goods and services under a established brand, but it does not refer to the legal structure of the business itself. Thus, incorporation distinctly provides corporate legal status.