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Important aspects of forming a corporation

Starting a new business is exciting but requires an intense amount of planning and preparation. Deciding which form of business your enterprise will take is a crucial step in the planning process. For individuals interested in forming a corporation, there are several important aspects that must be considered before doing so.

A corporation is a complex business structure. It typically has more startup costs than other forms of business like LLC's and sole proprietorship. The main difference between a corporation and other forms of business is that the corporation itself is considered a separate entity apart from its owners. A corporation's owners share stock and may make decisions regarding the corporation based on their share ownership. The shareholders income is also based on the amount of shares they own.

By keeping the corporation and its shareholders separate, shareholders protect themselves from being personally responsible for the corporation's obligations and debts. Various formalities such as holding annual meetings, electing a board of directors and issuing stock certificates ensure shareholders that they are separate from the corporation and, therefore, safe from being liable for any of the corporation's loss.

Corporations may be subject to more stringent government regulations and licensing fees than other forms of business. Forming a corporation is an extremely complex and involved process which usually requires the help of a team of legal professionals. For individuals interested in constructing a corporation, it is highly advised to speak to an attorney experienced with business formation and planning. With their help and resources, forming a corporation that meets licensing and government regulations and protects its shareholders may be made easier.

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