A corporation provides limited liability protection to its owners, meaning they are not personally responsible for the company's debts.
Questions & Step-by-step Solutions
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Q
Q: What is a key advantage of a corporation?
Solution: A corporation provides limited liability protection to its owners, meaning they are not personally responsible for the company's debts.
Steps: 4
Step 1: Understand what a corporation is. A corporation is a type of business that is legally separate from its owners.
Step 2: Learn about limited liability. Limited liability means that the owners (shareholders) are not personally responsible for the corporation's debts.
Step 3: Realize the benefit. If the corporation owes money or faces lawsuits, the owners' personal assets (like their house or savings) are protected.
Step 4: Conclude that this protection encourages people to invest in corporations, knowing their personal finances are safe.
