Which entity is created as a separate legal entity with its own assets and obligations and is treated as a pass-through entity for taxation?

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An LLC is formed as a distinct legal entity that can own assets, incur debts, and sue or be sued in its own name, separate from its owners. For taxes, it’s treated as a pass-through entity by default, so the entity itself doesn’t pay income tax; instead, profits and losses pass through to the owners and are reported on their personal tax returns. In a multi-member LLC, this means profits divided by membership percentages flow to members’ tax returns, while a single-member LLC is treated as a disregarded entity for tax purposes but still provides liability protection. This combination—separate legal entity status plus pass-through taxation—fits the description.

Sole proprietorship isn’t a separate entity from the owner, so there’s no distinct entity-level liability protection and taxes flow directly to the owner. A general partnership typically involves pass-through taxation as well but doesn’t offer the same liability protection as an LLC. A joint venture describes a collaborative arrangement and isn’t inherently a separate legal entity or guaranteed pass-through treatment unless formed as an LLC or similar entity.