Corporation
A corporation is a legally established entity that can enter into contracts, own assets and incur debt as well as sue and be sued–all independent of its owner(s). It must file articles of incorporation to become a corporation and must register in any other states where it intends to conduct business. Its operations are governed by its corporate bylaws, which outline how meetings are called to order, voting is conducted, ownership is documented and other operational logistics. Corporations are often perceived as more professional and legitimate than unincorporated entities like sole proprietorships or general partnerships.
Among the primary advantages of corporations are limited liability protection for shareholders and ease of transferring ownership. They also allow for certain tax planning strategies and a way to raise capital by selling shares of stock. Corporations require a board of directors to oversee company operations and establish policies. Corporate officers then execute these decisions.
While there are no educational or licensure requirements for forming a corporation, incorporating correctly and running it properly can take considerable skill, knowledge and time. It’s never a bad idea to engage counsel, be it legal or otherwise, to ensure you are conducting your business within the proper parameters. Additionally, it is important to understand the different types of businesses structures to be sure you are choosing the best one for your business. Download our whitepaper, Types of Business Structures to Know Before Starting a Company, for overviews, pros, cons and considerations for each type of entity.
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