Final answer:
Entrepreneurs commonly choose corporations as their business entity because they provide limited personal liability and the ability to raise capital more easily through the sale of stock or issuance of bonds. Corporations are considered separate legal entities, which encourages business growth and risk-taking, as personal assets are protected from business liabilities.
Step-by-step explanation:
Many entrepreneurs use the corporation as their entity of choice due to its various advantages. Incorporation offers entrepreneurs the benefit of limited liability, which means personal assets are shielded from business debts and legal actions. Corporations are recognized as independent legal entities from their owners, allowing them to own property, incur debt, sue and be sued, and provide greater flexibility in raising capital through selling stocks or issuing bonds.
Historically, the shift toward recognizing corporations as separate legal entities has greatly encouraged growth and innovation in the business sector. The model of the corporation gives entrepreneurs the confidence to take risks, with the knowledge that their personal financial liability is limited to their investment in the company, thus opening doors to attract investors and skilled managers essential for starting new ventures and industries. Despite the ease of starting a sole proprietorship, corporations are favored by entrepreneurs planning large-scale businesses due to the ability to pool resources from multiple investors and the potential for continued existence beyond the life of its founders.