What is one advantage of forming an S corporation?

Forming an S corporation offers the advantage of limited liability protection, which is a significant benefit for business owners. This legal structure helps to protect the personal assets of the shareholders from business debts and liabilities. In other words, if the S corporation faces financial difficulties or legal issues, creditors typically cannot pursue the personal assets of the shareholders to satisfy those obligations. This separation between personal and corporate liability encourages entrepreneurship by minimizing the financial risks associated with running a business.

Additionally, this feature of limited liability aligns with the fundamental principles of corporate law, where corporations are treated as distinct legal entities. While there are other considerations such as voting rights and regulatory burdens associated with different business structures, the limited liability aspect is particularly central to the allure of forming an S corporation.