MoCA Business Practice Test 2025 - Free MoCA Business Practice Questions and Study Guide

Starting a small business as a corporation offers significant advantages, particularly in terms of personal liability protection. When an entrepreneur establishes a corporation, it creates a separate legal entity that is distinct from the individual owner(s). This means that the personal assets of the entrepreneur are safeguarded from the debts and liabilities incurred by the corporation. If the business faces financial difficulties or legal issues, the entrepreneur is not personally responsible for settling those debts, beyond the amount they have invested in the corporation. This protection is a key reason many entrepreneurs choose the corporate structure over partnerships or sole proprietorships, where personal liability is often a concern, exposing owners to greater risk.

While securing investors, transferring ownership, and corporate longevity are also important considerations, the fundamental benefit of limited liability stands out as a critical advantage for entrepreneurs looking to reduce personal financial risk.