What type of business entity is legally formed to operate for profit?

• A. Nonprofit organization
• B. Corporation for profit
• C. Sole proprietorship
• D. Partnership

Answer: (B)

Think about how the structure is created and why profits matter. Nonprofit organizations are set up to pursue a charitable or public mission, and any profits are reinvested into that mission rather than distributed to owners. A corporation, by contrast, is formed through a formal filing with the state and becomes a separate legal entity. It is specifically designed to operate to earn profits for its owners or shareholders, while offering limited liability to them. Although sole proprietorships and partnerships can also pursue profits, they are less formal in structure and do not set up the same distinct legal entity that a corporation does. So, when the description highlights a legally formed entity whose purpose is to operate for profit, the best fit is a corporation for profit.