Each state has a section of law covering those aspects of corporations. The law is similar in each state, but not identical. A corporation cannot act except through individuals. When individuals perform on behalf of a corporation, the actions are usually attributable to the corporation and not to the individual. The ownership of property, the incurrence of debt, and the performance of services and sales of goods are the responsibility of the corporation rather than the individuals in the corporation.
Shareholders contribute capital to the company and are the owners of the corporation.
Shareholders are not responsible for the debts or liabilities of the corporation. One advantage of the corporate structure is that shareholder liability is limited to the loss of the shareholder s investment unless a shareholder accepts additional responsibility such as guaranteeing a loan to the company. Limitation of liability was the original reason for the creation of the corporate entity and it is still a basic consideration in the formation of any new business using the corporate structure. An additional advantage of corporations is the ability to bring other individuals into ownership of the business to raise additional funds. There are few disadvantages to using the corporate form in setting up a business.