Business Structures: The Corporation
The corporation provides the greatest degree of protection for the personal assets of the owners. A corporation is a separate legal entity recognized under the law (which gives it a healthy corporate culture), which has the same right and privileges of an individual. They are relatively easy and inexpensive to form, with all states providing regulatory mechanisms to register and oversee corporate operations.
Corporations offer a high degree of asset protection for the owners. In the event of bankruptcy of the corporation, creditors can collect debts only from the assets of the corporation, and are unable to attach the personal assets of the shareholders. In effect, the liability of the owners of a corporation is limited to the amount of their investment. There are certain exceptions to this as the result of court decisions, however, which permit creditors who have been injured through the negligence or willful misconduct of the corporation to pursue their claims against the personal assets of the individual working for the corporation who actually caused the injury. This type of situation is often covered by umbrella liability or good methodology insurance that is secured by the corporation to protect its employees.