The corporation is created and regulated by state law and there are requirements that must be met prior to operating as a corporation. The corporation is a legal and tax entity separate from any of the people who own, control, manage or operate it. The corporation has been referred to as a legal “person” meaning that is it capable of entering into contracts, incurring debts, and paying taxes separately from its owners (shareholders).

Some of the advantages of the corporation:

1. Limited Personal Liability. The owners are not personally liable for business debts, claims, or other liabilities;
2. It is a separate tax entity and is distinct from its owners and it is taxed on its profits;
3. Perpetual existence meaning it has independent legal existence that continues despite changeovers in management or ownership;
4. Free transferability of ownership interest;
5. Ownership is held by the shareholders
6. Required to have annual meetings of shareholders and directors; and
7. Unlimited amount of owners;