Limiting your liability to the assets of the corporation is the primary advantage of incorporating. It is common that shareholders are not responsible for the debts or obligations of the corporation. Unless you didn't personally sign for the loan and your corporation defaults on it, your personal assets are safe. With a sole proprietorship or partnership, this is not the case. There are many tax advantages that are available to corporations and not sole proprietors. A few of the advantages are: A corporation allows for easier setup of retirement funds and qualified retirement plans (such as a 401k). The life of a corporation is not limited and is not dependent upon its members. The corporation will continue to prosper and do business even if an owner dies or wants to sell their interest. A corporation has a centralized management. It is easy to transfer ownership of a corporation. With the sale of stock, capital can be raised more easily.