Final answer:
A corporation is formed by individuals known as incorporators, who obtain a charter from the state to operate as a separate legal entity, shielding personal assets and encouraging investment for business growth.
Step-by-step explanation:
The creation of a corporation begins when its organizers, called the incorporators, obtain a charter from the state. Incorporation allows entrepreneurs to operate with the same profit potential as a sole proprietorship, while limiting their financial and legal liabilities. This protection is crucial for entrepreneurs to take risks without fearing the loss of personal assets, and it is a necessary element for inducing investors to finance new ventures, which, in turn, can contribute to industrial growth and job creation.
Historically, the concept of a corporation as a distinct legal entity can be traced back to charters issued, such as the Massachusetts Bay Charter in 1629. This early form of corporation allowed the freemen, the charter recipients, to have a say in colonial governance while engaging in trade. Modern corporations, however, may be private or public entities, and can raise capital through the sale of stock or issuing bonds.