A corporation is a business entity that the law treats like an individual person. This legal separation protects shareholders from personal liability for company debts and lawsuits, and it makes it easier to attract investors. It’s important to consider your long-term goals before choosing a corporate structure.

Incorporating a company requires the filing of articles of incorporation with your state’s secretary of state or equivalent department. These documents act as the corporation’s official charter and establish its existence. You’ll also need to draft corporate bylaws, which detail internal functions, such as meetings and officer positions. It’s also important to get an employer identification number (EIN) through the IRS, which is required for tax purposes and opening bank accounts.

Once you have your articles and bylaws in place, you’ll need to create a board of directors. Directors oversee the corporation’s daily operations and management, while shareholders vote on major decisions. Corporations must also follow strict record-keeping and operational processes. It’s a good idea to consult an attorney and a tax advisor before filing for incorporation.

There are two types of corporations: C and S. The main difference is that C corporations are fully taxed, which means profits are taxed at the corporate level, and dividends paid to shareholders are taxed again on their personal income taxes. This structure is typically reserved for larger organizations due to its complexity and costs. It’s also expensive to comply with the many legal requirements of a corporation, such as annual meetings and filing paperwork.