So, what are the key features or personality characteristics of corporations? The first one is a formal creation. You can find your way into a partnership by accident, by just cooperating with another person. You cannot accidentally find yourself involved in a corporation. To create a corporation, you must file specific papers called articles of incorporation with a secretary of the state, of the state in which you are incorporating. Most people incorporate in Delaware. So you file what is sort of like the constitution for the corporation with the secretary of state of Delaware. You pay the nominal filing fee, and you form to create a company. The second characteristic is legal separateness or legal personality. Corporations are separate entities from the people who form them. That separation means that unlike in a partnership where the partners are liable personally and act as the partnership, the partnership is the partners, in a corporation, the corporation is completely separate legal entity. It can be sued in its name, it sues in its name, it has to pay taxes as if it were an individual. The corporation is a separate legal entity from the people that constitute it. A third key characteristic of corporations is limited liability. The liabilities of the corporation are the responsibility of the corporation as a separate entity. In general, subject to some exceptions, the debts of the corporation are the corporation's debts. And people who have claims against the corporation, whether they're tort creditors, or contract creditors, cannot seek to remedy those things by going after the people who are the founders of the corporation, the managers of the corporation, and the employees of the corporation. Those people are protected from any kind of obligation for the liabilities of the corporation. In addition, there's a corollary feature there, which is called affirmative asset partitioning. Affirmative asset partitioning is that the creditors of the individuals who form the corporation cannot go after the assets of the corporation. So if you form a corporation and you put some assets in it, your personal creditors as an individual cannot go after the assets of the corporation. So there's limited liability, which protects you from debts of the corporation as a founder, and there's affirmative asset partitioning, which is your own personal creditors cannot go after assets in the corporation.

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