What is the primary characteristic of a corporation?

A corporation is characterized primarily by its separate and distinct legal existence from its owners, which is foundational to its structure. This means that a corporation can own property, enter into contracts, sue and be sued in its own name, independent of its shareholders. This separation provides liability protection to the owners, meaning their personal assets are typically not at risk for corporate debts and liabilities.

This distinct existence is crucial in defining the corporation's ability to operate as an independent entity, making it different from other business structures such as sole proprietorships or partnerships, where the owners and the business are often seen as the same entity in a legal sense. This characteristic also allows for continuity, as corporations can continue to exist beyond the life of their owners or founders, enabling smoother transitions in ownership and management.

The other options present misinterpretations of what defines a corporation. A corporation is not an informal group; it must adhere to formalities and regulatory requirements. It is indeed recognized in all states, though the processes of formation and regulation may differ from one state to another, which is not the same as being recognized only in certain states. Additionally, a corporation must complete formal filings to be legally established, contrary to the idea that it requires no formal filing to exist.