Which is a key advantage of forming a corporation?

Forming a corporation offers the advantage of limited liability for its owners, which is a fundamental feature that distinguishes corporations from other business structures. This means that the personal assets of the owners (shareholders) are protected from the corporation's debts and legal obligations. If the corporation faces lawsuits or incurs debts, the financial risk is confined to the amount that the owners have invested in the corporation. This protection encourages investment and allows entrepreneurs to engage in business activities without the fear of losing personal wealth.

The concept of limited liability is central to the appeal of corporations, as it fosters a safer environment for business operations. It also promotes greater willingness among individuals to invest in corporations since their potential losses are limited to their investment stake and their personal assets remain safeguarded.