What is an advantage of organizing a business as an corporation?

Investors only risk losing the money they themselves put into a company.

When a person owns and manages a business by himself (sole proprietorship), he is liable to pay for the company's losses with his own capital and assets. If he takes the company public (corporation) and allows shares to be bought by investors, he is only limited to lose capital from the business while his personal assets remain protected. The other advantage is that in a corporation, the company will still exist if one or more owners or executives pass away and will not be affected financially.

BUSINESS ADVANTAGES OF ORGANIZING A BUSINESS AS A CORPORATION

1 - People who establish a corporation have a ready access to major sources of loans and advances e.g. banks and financial institutions.

2 - A corporation can issue its shares to public to expand its business whereas partnership and proprietorship cannot issue shares.

3 - Since a corporation employs a large number and variety of people having different expertise, it can expand and develop its business more efficiently and effectively than any other mode of business.

4 - In case of a manufacturing corporation, it can purchase raw materials on short term as well as long term credit as suppliers place a significant reliance on corporations regarding their payments.

5 - Corporations can purchase bulk supplies of required materials and supplies at cheaper rates.