At law, a corporation is considered a separate legal person. A corporation can enter into contracts, borrow money and own property. According to the theory of limited liability, if a corporation is a party to a contract, the corporation alone should be liable for its breach of that contract. Or, if a corporation borrows money, it alone should be responsible to repay the loan. So, the concept of limited liability means that the owners are separate from their company and are not generally responsible for

company's debts, obligations or liabilities.
Along with the major advantages described below, there are additional advantages and disadvantages that are listed in our post article, “Top Tips Any Entrepreneurs Should Know Before Incorporating in Ontario”, including: 

• Perpetual Existence
• Advantages when Raising Capital
• Easier to Include Multiple Owners
• Tax Advantages when transferring Ownership
• Avoiding Transitional Expenses Later

If you want to learn more about a corporation raising capital through debt or equity, check out this article.

A corporation is considered a separate legal person. This means it can enter into contracts, borrow money and own property. According to the theory of limited liability, if a corporation is a party to a contract, that corporation alone should be liable for its breach of the contract. Or, if a corporation borrows money, it alone should be responsible to repay the loan. Thus, the concept of limited liability means that a corporation is seperate from its owners who are not generally responsible for its debts, obligations or liabilities.
Keep in mind that limited liability is a general rule and there are definitely exceptions in the real world. For example, if your company borrows money from a bank, they usually require that you personally guarantee repayment of the loan. Or, if your company wants to lease commercial space, the landlord may ask that you personally guarantee payment of the rent. There are ways to minimize personal guarantees, but be aware that the limited liability protection of a corporation is not absolute. You should also know that directors of a company have personal responsibility in certain circumstances. Specifically, if your company owes money for taxes or employee deductions to the government, you as a director can be held personally liable for these amounts.

Incorporation is not the right fit for every business. Along with the advantages noted above, there are additional advantages and disadvantages of incorporation that every entrepreneur. We have covered some of these points in our Listicle here, “Ten Tips Every Entrepreneur in Ontario Needs to Know about Corporations Right Now”, including: 

• Perpetual Existence
• Advantages when Raising Capital
• Easier to Include Multiple Owners
• Tax Advantages when transferring Ownership
• Avoiding Transitional Expenses Later

If you want to learn more about a corporation raising capital through debt or equity, [check out this article].