Setting up a corporation may require the help of a lawyer, but many business women do set up corporations on their own. You need to submit several legal documents, and the exact wording and requirements can vary by state.
To check your state's incorporation guidelines contact your Secretary of State.
To incorporate a business you must file Articles of Incorporation with your Secretary of State. All nonprofit corporations require a board of directors, officers and directors. Most corporations can also have shareholders and voting members (who usually pay dues).
Corporations are governed by a set of Bylaws, which are usually filed along with Articles of Incorporation. Corporations become a legal entity that "owns" itself. Corporations can have their own bank accounts, assets, and even secure financing.
- Advantages: Personal liability is usually limited to the amount an individual investor has invested in the corporation. Certain representatives of the corporation can sign for loans on behalf of the corporation, rather than having to personally co-sign for loans.
- Disadvantages: Corporations are subject to regulations that do not apply to other types of business structures. Incorporating can be expensive, and founding documents require specific legal language. Since no one person owns a corporation, founders can lose control if a board of directors or membership votes to change the way business is done.
Limited Liability Companies (LLCs): LLCs are sometimes referred to as a "Limited Liability Corporation," but LLCs are not traditional corporations, and the preferred term is "Company." Their business structure is similar to standard corporations, but simpler to establish.
