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The Incorporation of a business requires the filing of Articles of Incorporation with the appropriate state entity (usually the Secretary of State). Once filed, the corporation is formed and the incorporation process is complete.

Incorporating a business or forming an LLC has grown in popularity in recent years for the following reasons:

  • The costs of incorporating are comparable to the costs of starting a business under a different business structure.
  • The benefits of incorporating a business greatly outweigh the initial formation costs.
  • No lawyer is required to file articles of incorporation.

Try our Business Structure Wizard to gain a better understanding of why certain business structures may be better suited for different business models.

The most popular business structures include:

  • Limited Liability Company:
    • The most popular business structure offering asset protection, flexibility in taxation of profits, and minimal formalities. See Benefits of the LLC.
  • S Corporation:
    • A Corporation that has made a special tax election so tax liability passes through the corporation and is imposed directly onto the shareholders. See S Corporation.

VIDEO: Benefits of the S Corporation

VIDEO: S Corporation vs. LLC

  • C Corporation
    • most businesses traded on the stock exchange are C Corporations. In addition, business owners seeking venture capital or those who intend on investing profits into future growth usually select the C Corporation
  • Sole Proprietorship
    • Although the Sole Proprietorship has almost no formalities and minimal startup costs, there is also no asset protection afforded to the owner. To start a Sole Proprietorship, the owner must File a DBA (a filing notifying the public that the owner is “Doing Business As” a sole proprietor operating under a company name)
  • Partnership
    • A Partnership is similar to a Sole Proprietor but has multiple owners. Although a written agreement is not usually required between partners, it is STRONGLY recommended.