Initially, the concept of an incorporated company was developed in response to the need in financing large economic projects without the limitations associated with sole proprietorships and partnerships. Sole proprietorships created problems because they did not allow for the acquisition of substantial capitals through the participation of many entrepreneurs. The difficulty with partnerships was that major decisions needed to be agreed upon with all the partners, thus making large partnerships impractical. What was needed was to make a large number of people participate in a business venture without playing an active role in it, and the idea of a corporation was initially designed to accomplish this end. Therefore, the most significant feature of an incorporated company is that it represents a separate legal entity from ...
Incorporation Basics
Initially, the concept of an incorporated company was developed in response to the need in financing large economic projects without the limitations associated with sole proprietorships and partnerships. Sole proprietorships created problems because they did not allow for the acquisition of substantial capitals through the participation of many entrepreneurs. The difficulty with partnerships was that major decisions needed to be agreed upon with all the partners, thus making large partnerships impractical. What was needed was to make a large number of people participate in a business venture without playing an active role in it, and the idea of a corporation was initially designed to accomplish this end. Therefore, the most significant feature of an incorporated company is that it represents a separate legal entity from ...
