What is the purpose of a corporation?

The purpose of a corporation is to operate as a legal entity distinct from its owners. This means that a corporation has its own legal personality, which allows it to enter into contracts, own property, sue, and be sued independently of the individuals who own it (the shareholders). This distinct legal status provides limited liability protection to its owners, meaning their financial responsibility is generally limited to their investment in the corporation. This structure is advantageous as it can facilitate raising capital, as investors may be more willing to invest in a corporation knowing that their personal assets are not at risk beyond their investment.

The other options do not accurately reflect the purpose of a corporation. Providing services without profit aligns more closely with non-profit organizations. Serving only its employees is too narrow a focus and does not encompass the corporate mission, which commonly includes a wider array of stakeholders, including shareholders and customers. Managing a partnership suggests a different business structure and does not apply to corporations, which are distinct legal entities with their own governance and operational procedures.