Which of the following is a feature of limited companies?

• A. They operate as sole traders
• B. They cannot raise capital by selling shares
• C. Pay corporation tax
• D. Unlimited liability

Answer: (C)

Limited companies have their own legal identity, so they pay corporation tax on their profits. This tax is charged to the company itself, not to the individual owners, which is a key feature that sets this structure apart from others like sole traders. The other statements don’t fit: a limited company isn’t a sole trader, it can raise capital by selling shares, and its owners have limited liability rather than unlimited liability. So paying corporation tax on profits is the defining tax-related feature of a limited company.