Short Answer 
A corporation is a separate legal entity that can own assets, enter contracts, and incur tax obligations independently from its owners, thus providing limited liability. It can also raise capital by selling shares, which encourages investment while protecting the personal assets of its owners from corporate debts.
Step 1: Understand the Separate Legal Entity
A corporation is recognized as a separate legal entity from its owners, which grants it distinct rights and responsibilities. This means that the corporation can own property, enter contracts, and can even be sued without involving the personal assets of its owners. The separation also extends to tax obligations, ensuring that the corporation pays taxes independently of its shareholders.
Step 2: Capital Raising Through Stock Sales
One significant advantage of a corporation is its ability to raise capital. By selling shares of its stock, a corporation can acquire substantial funding necessary for business operations and expansion. This process allows investors to buy ownership in the company, which can lead to enhanced financial resources for growth and development.
Step 3: Understanding Liability and Ownership Structure
While owners can enjoy benefits, they also have limited liability for the corporation’s debts. Owners, also known as corporators, are not personally responsible for the corporation’s financial obligations. This structure encourages investment since personal assets of owners remain protected from corporate liabilities, fostering an environment conducive to business growth.