What Is a Corporation?

By Jeremy Bowman – Updated Oct 9, 2025 at 2:04 AM

Key Points

Corporations offer liability protection, simplifying capital raises and management structuring.
Corporate operations face double taxation and strict regulatory demands, increasing overhead.
Different corporation types include S Corps, which avoid double taxation, and C Corps, which facilitate stock options.

The word corporation might be synonymous with big business to most readers, but there’s more to the concept than that. A corporation is a type of business structure that allows a business to form a legal entity that is separate from its owners.

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a graphic defining the different types of corporations — Image source: The Motley Fool

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Liability

When it comes to evaluating a business, a liability is really just a one-word description of what a company owes to other parties.

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About the Author

Jeremy Bowman has been a contributing Motley Fool stock market analyst, covering technology, consumer goods, and macroeconomic trends since 2011. Before The Motley Fool, Jeremy was a newspaper reporter, restaurant manager, and English teacher abroad. He holds a bachelor’s degree in English from Colorado College and a master’s degree in business administration from American University. One of his Motley Fool headlines was briefly featured on Late Night with Stephen Colbert.

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