Question

Which was the most important reason for the forming of corporations

Answer 1

Corporations are the longest standing business structure leading the pack in the amount of protection and flexibility for shareholders. We examine the top reasons to form a corporation for your business. These benefits are provided by the corporate veil, which is the legal definition of the separation between the business and its owners.

Limited Liability For Shareholders
Corporations offer the strongest protection from business liability for the business owners, or shareholders. This means that there are provisions in the law such that your personal assets are not in jeopardy to satisfy corporate obligations, specifically from creditors. Legally, corporations are separate entities from those who own them. Corporations will pay their own taxes, can own property, enter contracts, sue and be sued independently of those who own them and are responsible for their own debts and actions. As long as your corporation is operated as a true separate entity, shareholders are not personally liable for business obligations. There are exceptions to this and shareholders can assume personal liability if the corporation is improperly established, if any individual personally guarantees debt or credit or funds are commingled where the shareholder and business is acting as one in the same. In order to truly benefit from the liability protection offered by corporations, they must be organized, managed and maintained as true separate entities. Corporations have hundreds of years of court-proven performance protecting shareholders from business liability. If the corporation was used as a tool to defraud any creditor or was undercapitalized as an attempt to defraud a lender, the corporate veil could be pierced by the court. Therefore the corporate structure could be disregarded and the business owners face could be held personally liable for the actions, debts and obligations of the business. It is important that your company is properly established and that you follow formalities and maintain separate status when operating a corporation.Raising Capital
If your business endeavors include seeking financing from external sources, a corporation offers the most flexibility of ownership. There are several types of stock that can be issued and sold to finance the business. This aspect of the business structure makes corporations attractive to businesses with big plans for growing through raising capital. You can sell non-voting shares of stock, which means a shareholder is entitled to profit distributions based on their share of ownership, but have no control over the business activity. This creates silent partners, or more specifically capital partners of the business. Using the structure of the corporation you can create different types of owners, those who have control, those who are entitled to profit distributions or both. The corporate structure is attractive to outside investors and selling stock is easy.Flexibility of Ownership
“C” Corporations have great flexibility of ownership. Shareholders can be individuals, foreign or domestic. Other corporations or legal entities can own stock in a corporation. Corporate stock can be held in a trust, partnership or other legal tool. Simply put, almost anything and anyone can be a shareholder of a C corporation. This affords the business opportunities to seek partners and capital from sources that other business types cannot.
PLZZ MARK BRAINLIEST