What defines a corporation?

A corporation is fundamentally defined as a business entity that is owned by stockholders and operates under a charter granted by state law. This legal structure allows the corporation to function as a separate legal entity distinct from its owners, which provides shareholders with limited liability. This means that the personal assets of the stockholders are protected from the corporation's debts and liabilities.

In contrast, a sole proprietorship is owned by a single individual and does not offer limited liability protections, making the owner personally liable for any business obligations. A partnership can indeed have tax considerations, but it does not change the fundamental nature of a corporation. A non-profit organization, while also a legal entity, is primarily motivated by serving a community purpose rather than generating profit for shareholders. Thus, the defining characteristic of a corporation relates directly to its structure, ownership, and the legal protections afforded to its shareholders.