Which business pays a federal income tax and has separate legal entity from persons who operate it?

A corporation is a business that pays federal income tax and is a separate legal entity from the individuals who operate it. This means that the corporation can own assets, incur liabilities, and enter into contracts independently of its owners or shareholders. As a distinct legal entity, a corporation provides limited liability protection to its owners, meaning their personal assets are generally shielded from business debts and liabilities.