Give three reasons why an owner would wish to start a corporation rather than a proprietorship...

Give three reasons why an owner would wish to start a corporation rather than a proprietorship or partnership.

Expert Solution

Three reasons why an owner would wish to start a corporation rather than a proprietorship or partnership are as follows:

1. Liability of a corporation is limited: Corporations provide protection in the form of limited liability to their owners or shareholders. In corporations the owners are not personally responsible for the debts and liabilities of the business which means that the creditors or other outside parties cannot claim on owners’ personal assets, such as a property or other personal assets in order to pay debts.

2. Life of a Corporation is unlimited: The life of a Corporation is not dependent on its owners, which implies that the Corporation continues to exist even on the death of the owner.

3. Capital can be raised with more ease: In case of raising funds from public, Corporation can easily issue shares in the market and can raise money from the public.

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