June 4

What Is a Corporation?


A corporation is a type of business recognized by law as a single entity that’s separate from its owners (or shareholders)

A corporation has many of the same legal rights and responsibilities as a person.

  • It can:
    • enter contracts
    • hire employees
    • pay taxes
    • loan or borrow money
    • sue or be sued

A corporation is created (incorporated) by its owner(s) according to the laws of the state where it will operate

Owners who decide to incorporate generally do so to obtain limited liability, a primary benefit of being a corporation

  • Limited liability for a corporation means that individual owners are not held personally liable for the corporation’s actions or debts beyond the amount of their financial investment in the business.

If you’ve decided to form a corporation, your next step is to decide whether to be a “C” corporation or an “S” corporation.



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