William Smith is a sole proprietor of a successful business. He is interested in incorporating to protect his personal assets. Which advantage of incorporation is most applicable? What are other advantages of organizing as a corporate entity?
What will be an ideal response
Stockholders are not personally liable for the debts of the corporation. Other advantages of the corporate entity form include the following:
†¢ Stockholders cannot bind the business to a contract; lack of mutual agency
†¢ Indefinite life
†¢ Can raise more money than sole proprietorships and partnerships
†¢ Transfer of ownership easy
†¢ No personal liability for corporation debts for owners (stockholders)
†¢ Limited liability for corporation debts for stockholders
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