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Q.What is a corporation?
A.A corporation is a legal entity that exists separate and apart from its owners. Creation of a corporation occurs when the Articles of Incorporation (sometimes also referred to as a Charter or Certificate of Incorporation) are properly prepared and filed with the appropriate state office. The process, however, does NOT end there. The organizational structure of a corporation relies on three basic groups: shareholders, directors, and officers.
The owners of the corporation are called shareholders. Unlike the owner of a sole proprietorship, the shareholders of a corporation do not directly run, operate, and manage the corporation. Instead, they influence corporate decision making indirectly by electing and removing directors, who are responsible for managing the major business affairs of the corporation. As the directors only make major business decisions, they are responsible for appointing and supervising officers of the corporation (President, Vice President, Secretary, Chief Financial Officer, etc...) who in turn make the day-to-day business decisions for the corporation.
Many paralegal services, and online incorporation services, will prepare and file your Articles of Incorporation and give you a fill in the blank corporate kit that in small print will tell you to seek the services of an attorney. If you don't file all of the additional paperwork required in your state or local area, obtain the appropriate licenses, issue stock, hold both shareholder and directors meetings, and properly capitalize your corporation, you could easily lose the benefit of personal liability protection. See, Piercing the Corporate Veil and How To Maintain Your Personal Limited Liability Protection.
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