What is a corporation?
A corporation is an entity that allows individuals to do business without exposing themselves, personally, to the financial liability or loss associated with running a business. Although the individuals involved in running the corporation share in the losses and profits generated by the corporation.
It remains separate from the personal holdings of the individuals. Thereby protecting the personal assets of the individuals from become responsible for the debts or losses associated with the operation of the business. It is a separate unit, that exists until the parties involved dissolve it or merge it with another corporation or business.
"A corporation is a separate and distinct legal entity. This means that a corporation can open a bank account, own property and do business, all under its own name."
"A corporation is managed by a board of directors, which is responsible for making major business decisions and overseeing the general affairs of the corporation."
There are basically three types of business organizations, the sole propriertorship, the partnership, and the corporation. There are several components that differentiate the corporation from the other two. It has a licence or 'charter' to operate by a state or the federal government. This charter givers the business the right to operate, sell stock, and legally separates it from its owners. In other words, when a business incorporates it becomes a separate entity in the eyes of the law. (viewed as an artifical person with regard to lawsuits) This is considered the greatest advantage of the corporation. It serves as a protection against seizure of personal assets if the business fails.