Final answer:
The governmental requirements for incorporation contrast with the freedom of association doctrine, providing the framework necessary for entrepreneurs to create corporations with limited personal liability and the ability to raise capital without risking personal assets.
Step-by-step explanation:
By incorporating his business, Gordon has taken significant steps towards financial security and growth potential. With incorporation, the business can enjoy profits and control similar to a sole proprietorship while limiting personal financial and legal liabilities. If the business were to fail, investors and owners' losses are generally limited to their investment, protecting personal assets. This legal separation is critical for attracting investors, as it enables entrepreneurs to raise capital without subjecting themselves to the risk of losing personal wealth.
Incorporation procedures, regulated by governmental requirements, contrast with the freedom of association doctrine. This freedom allows for the formation of groups or organizations including businesses without undue state interference, however, it is the process of incorporation that necessitates state control and approval. Thus, while the freedom of association allows for the creation of partnerships or corporations, the actual act of incorporating requires adherence to specific regulations set forth by the government.
As businesses evolve, they may transform from sole proprietorships to partnerships and eventually to corporations, each with distinct advantages and disadvantages. Corporations can raise more capital, which provides the flexibility to grow, merge, and possibly become conglomerates or multinationals. Despite having to comply with more government regulation compared to other business forms, the capacity to raise substantial capital and the protection from personal liability make incorporation an attractive business strategy for growth and development.