While businesses can be conducted without any formal organization by an individual (called a sole proprietorship) or in informal partnerships, the primary reasons for selecting a corporate form are for the limited liability and perpetual existence that these organizations can provide. Sole proprietors and partnerships are usually personally liable for the debts and obligations of their businesses and the businesses cease upon the death or departure of the principals. On the other hand, once a company is formed it is regarded as a separate legal entity from its owners.
Companies also offer the ability to transfer all or a portion of the ownership interests in the company using straightforward, well-recognized methods. Establishing a company can also add credibility to the enterprise in the marketplace and help present a professional image.