What distinguishes a corporation from other business forms?

A corporation is primarily distinguished from other business forms by the concept of limited liability for its shareholders. This means that the personal assets of the shareholders are protected from the corporation’s debts and liabilities. If the corporation faces financial difficulties or legal issues, shareholders are typically only liable for the amount they invested in the corporation, rather than their personal wealth being at risk. This legal protection encourages investment and financial risk-taking, as it limits the potential losses that shareholders might face.

While the ability to employ workers, a focus on community service, and the size of the business can be characteristics of corporations, they are not exclusive to this business form. Other entities like partnerships and sole proprietorships can also hire employees. A corporation may engage in community service, but that focus is not a defining characteristic of the corporate structure. Additionally, corporations can vary greatly in size, and size alone does not differentiate a corporation from other business forms, such as small businesses or sole proprietorships. Thus, it is the limited liability feature that fundamentally distinguishes a corporation from other business entities.