Corporation (US law)

A corporation is a legal entity. Most are formed to run a business and make a profit, but some are formed as a non-profit, to provide some other benefit. Corporations are considered separate legal entity, and thus can sue, be sued, and enter contracts.

Advantages of a corporation

Corporations provide limited liability; that is, investors cannot be forced to pay from their personal asset for debts of the business. Publically-traded corporations have access to huge capital markets by offering stocks, bonds and other investments to the public. There is also some degree of prestige associated with being a corporation, and corporations often have an easier time attracting skilled workers.

Disadvantages of a corporation

In the United States, corporations are subject to corporate income taxes, while the salaries of workers and the dividends of investors are again taxed as personal income, resulting in double taxation. Corporations involve a greater deal of beauracracy than other forms of organization, particularly for public companies who must fully disclose their financial data.