For the very reason that partnerships so greatly outnumber corporations in the contracting business, one of the most frequent questions lawyers have fired at them by contractors is: "Should we incorporate?" Like almost all questions involving either business of law, there just isn't any simple clear-cut answer to this one. It depends on quite a lot of things. But here are some broad principles that should be understood by everybody who is likely to have to struggle with the thorny "to incorporate or not incorporate" problem. Corporations are legal persons and as such they have certain rights and characteristics that set them apart from other types of business forms. It is these rights and characteristics that make it advantageous for some small businesses to incorporate but not for all. Some of these rights and characteristics are: a corporation is perpetual. If someone dies, the business does not have to be reorganized. A corporation has power to own an convey property both real and personal and to enter into contracts within the limits of its corporate character just as if it were a person. The shareholders of a corporation are exempt form personal liability for the debt of the corporation beyond the amount of their shares in the corporation. If the company goes bankrupt, only the value of the shares is lost by the individuals. Lastly, shares of stock in a corporation may be sold to another person without the consent of the corporation. This means you could be working for some you don't like.