Which is an advantage of forming a corporation?

Forming a corporation provides the significant advantage of reducing personal liability for its shareholders. When an individual invests in a corporation, their potential financial liability is limited to the amount they invested in shares. This means that personal assets of the shareholders, such as their homes or personal savings, are generally protected from the debts and legal obligations of the corporation. This limited liability encourages investment and participation in corporate structures, knowing that personal financial risk is minimized.

The other options do not accurately reflect the advantages of forming a corporation. The corporation's value can fluctuate in the market, and there is no guarantee that it will not decrease below the initial purchase price. Taxation in corporations can sometimes be more complex, often resulting in double taxation (on corporate profits and shareholder dividends) compared to partnerships or limited liability companies. Additionally, while corporations may benefit from more structured decision-making processes, they can also involve slower decision-making due to the need for board approvals and formalities, especially in larger organizations. Thus, the primary and well-recognized benefit lies in the protection of personal assets through reduced liability.