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Legal interpretation


Limited Liability. 

An advantage to incorporating is the limited liability aspect conferred upon its shareholders. The shareholders are not subject, by and large, for the debts and different commitments of the company. An investor's obligation for the debts of the company is constrained to the amount of assets each investor has put into the organization. Creditors only have rights against the company itself and not against the shareholders.

Perpetual Existence.
A partnership has the component of never-ending presence. It isn't reliant upon the life of its shareholders, directors and officers and won't be influenced by changes in, deaths or retirements of its shareholders since the corporation is viewed as a different "individual". This preferred standpoint takes into consideration the efficient exchange of ownership (i.e., its shares). Because of its autonomous legal status, it might possess property in its own right, go into contracts and sue (or be sued). 

Capital Acquisition. 
A company may offer more sources of raising capital than different business formations, (for example, sole proprietorships and partnerships). Corporations can issue different classes of shares as well as other debt instruments such as bonds, to raise capital, which is more alluring to investors.

Tax Advantages. 
Corporations offer great tax an advantages such as lower income tax rates and corporation can carry forward operating losses of previous years to offset operating profits in current years.

Credibility and Prestige. 
Incorporating gives your business credibility and prestige in its business dealings. 

Start-Up Costs. 
The underlying start-up costs (i.e., government charges) might be costly when contrasted with the start-up expenses of sole proprietorships and partnerships.

Maintaining of Corporate Records.
A company is required to accurately keep up its corporate records as well as hold meetings, choose executives and furnish shareholders with certain corporate financial data.

Double Taxation. 
Income created by an organization is burdened at both the corporate level and shareholder level. A company must pay taxes on its income and the shareholders must pay taxes on dividends (i.e., profits they get from the company). Be that as it may, quite a bit of this two fold taxation might be limited by balancing the company's operational expense (i.e., salaries) with its income.