A corporation is a separate legal entity that is held by one or more people and has its own, rights obligations, and privileges that are independent from those of its owner (s).
The United States Constitution effectively defines a corporation as a distinct legal person with a continuing existence and rights and obligations that are similar to those of an individual.
This indicates that a corporation can file lawsuits or be sued, and it does not cease to exist upon the death of one of its owners.
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Advantages of Corporations</h2>
A corporation has a lot of advantages over other types of commercial organizations due to particular qualities that it possesses.
These benefits include simplicity of raising cash, professional management, transfer ability of ownership, and limited liability for shareholders.
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Limited Liability of the Shareholders</h2>
A business is in charge of its own duties. Only the corporation's assets can be used by its creditors to pay off their debts. In most cases, the owners' total liability is capped at the amount they invested in the corporation.
Therefore, regardless of any future debts the business may accrue, if you invested $5,000 in a corporation, your liabilities would only be for that amount.
However, the shareholders are frequently needed to guarantee corporate loans from banks and other creditors in many smaller firms controlled by families or a small number of people.
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