Choosing to incorporate is a smart decision for startup companies, small businesses and entrepreneurs. The corporation formation process creates a distinct business entity that is separate from its owners. Once properly formed, a corporation can conduct business and enter into contracts as if it were a natural person.
A key advantage of incorporation is that its founders are protected from personal liability. This means that if a corporation fails, the founder’s or shareholder’s loss is generally limited to the extent of their investment, and they may not be further liable for corporate debts or obligations. Other advantages include enhanced business credibility, transferable ownership shares, clear organization, protection of corporate assets and increased business liquidity.