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Because corporations exist purely to establish trust.

Depending on where you live, I don't believe there's much stopping a group of people getting together and offering services, they can do so anonymously if they want.

However, when you incorporate you do so specifically to register your "group" with the government so that people dealing with you know you're operating legitimately, following laws etc. It's about trust, trust is inherently not anonymous.




People do not incorporate so others know you're "operating legitimately." Incorporation is required for legally formalizing ownership structures, separating your own assets from company assets, getting your employer identification number (which, in turn, is necessary to hire people), get a business banking account for the operation, clarifying tax/expensing factors, and numerous other business related reasons.

While I'm sure somebody somewhere has incorporated for trust, but that's a very obscure reason. It's certainly not "the specific reason for incorporation." It also doesn't even make any sense. One of the benefits of incorporation is to minimize the recourse available to customers - namely in that your personal assets cannot be touched. Somebody operating an unincorporated business is exposing themselves to unlimited liability if they run afoul of anything.


Most places sole proprietorships (under whatever name) and/or partnerships can still hire people, and get separate bank accounts and the like. This certainly includes the US, as well as the UK and most European countries (I don't know if it applies to all of them).

You most certainly can obtain a EIN in the US without being incorporated, and a fairly large portion of non-incorporated businesses will need one.

> One of the benefits of incorporation is to minimize the recourse available to customers - namely in that your personal assets cannot be touched.

... and that's one of the key reasons why the other side of the coin is additional transparency to counter the increased abuse potential.


Corporations are not about trust - they are about risk.

Most simply the ability to pool and share risk among a group of people and in most cases limit the extent of of personal risk when undertaking some activity.


In the UK a group of people could trade as a partnership - which I believe doesn't exist as a separate legal entity.




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