A corporation is a body--it is a legal person in the eyes of the law. It can bring lawsuits, can buy and sell property, enter in contract agreements, and of course be taxed. It's most notable feature is that a corporation protects its owners from personal liability for corporate debts and obligations, within certain limits.
It is true that operating as a corporation has its share of drawbacks in certain situations. For example, as a business owner, you would be responsible for additional record keeping requirements and administrative details. More important, in some cases, operating as a corporation can create an additional tax burden. This is the last thing a business owner needs, especially in the early stages of operation.
Remember, aside from tax reasons, the most common motivation for incurring the cost of setting up a corporation is the recognition that the shareholder is not legally liable for the actions of the corporation. This is because the corporation has its own separate existence wholly apart from those who run it. However, let's examine four other reasons why the corporation proves to be an attractive vehicle for carrying on a business.
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