Incorporation

Incorporation is the process of forming a corporation. A corporation is a legal entity that is separate from its owners. This means that the corporation's assets and liabilities are distinct from those of its owners. Incorporation offers several advantages, including limited liability, perpetual life, and centralized management.

**Limited liability** means that the owners of a corporation are not personally liable for the corporation's debts. This protection is important because it can shield the owners from financial ruin if the corporation fails.

**Perpetual life** means that a corporation can exist indefinitely, even if its owners die or sell their shares. This can be an advantage for businesses that want to plan for the long term.

**Centralized management** means that the corporation's affairs are managed by a board of directors, which is elected by the shareholders. This can be an advantage for businesses that need to make decisions quickly and efficiently.

There are several steps involved in incorporating a business. These steps typically include:

1. Preparing the articles of incorporation. The articles of incorporation are the legal documents that establish the corporation. They include information such as the corporation's name, purpose, and location.
2. Filing the articles of incorporation with the state. Once the articles of incorporation are prepared, they must be filed with the state in which the corporation will be formed.
3. Obtaining a federal tax identification number. All corporations must obtain a federal tax identification number from the Internal Revenue Service (IRS).
4. Opening a business bank account. Corporations must open a business bank account to conduct business.
5. Issuing stock. Corporations can issue stock to raise capital. Stockholders are the owners of the corporation and have a right to vote on its affairs.

Incorporation is a complex process, and it is important to consult with an attorney before taking any steps.