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General information about formation and structure. Corporations are a legal entity formed under state laws. Corporations are owned by shareholders.

Shareholders elect a board of directors, which is responsible for overall management, and hires corporate officers to run daily operations of the corporation. A corporation can have as few as one shareholder who can elect himself to the board and can run the daily operations of the corporation.

A corporation can be either an S- or C-Corp.

Limited liability. The main reason businesses are corporations, not partnerships or sole proprietorships, is to avoid personal liability for negligent actions of the corporations. This includes limited liability of the corporate shareholders as well as individual liability of the employees of the company who are acting within the scope of employment.