Conducting business under a corporation structure is the most common way of doing business in the US. It is not only available to the big corporations but it is available to virtually anyone that wants set up a corporation. Most states allow the set up of a corporation with only one person (the stockholder). This type of corporate entity offers the most enduring legal structure because of the separateness doctrine; meaning that the founder (or the stockholder) is separate from the corporation. Thus, the corporation is considered a separate entity. This allows a broader protection from the liabilities, lawsuits, and judgments. A corporation provides a legal shield to its owner(s).

Theoretically, a corporation has a perpetual life independent of the stockholer(s), and may continue to operate regardless of changes in the ownership of its stocks. The stockholder has a vested interest in the corporation but he/she is not the corporation. Thus, dual status is beneficial to the stockholder, but also places a responsibility of managing the corporation. A stockholder may be a president, secretary, and chief operating officer, and yet be classified as the employee of the corporation. Since the stockholder is also an employee, he/she is also entitled to most of the employee benefits (some restrictions apply).

There are two other types of entities, which also fall in the same category as corporation:

1.	Close Corporation: is a corporation whose certificate of incorporation provides certain restrictions not applicable to a regular corporation. The types of restriction may vary from state to state, but in general:
	a. Stocks may not be held by more than a specified number of shareholders. For example, in Delaware, no more 30 shareholders b. A close corporation is not permitted to sell its stocks to the public c. All stocks issued are subject to restriction of transfer d. Not available in all states
2.	Professional Corporation (PA or PC): is in fact a regular corporation allowed only to individuals with designated professions, such as doctors, attorneys, accountants, dentist, etc. In most states a professional license is required to conduct as a Professional Corporation. PAs & PCs offer same level of personal protection as a regular corporation. Federal and state taxes apply in the same manner as any other corporation.
Advantages:
	Owner'/stockholders' personal assets are shielded from the business debts
	Stocks and ownership interest can be easily transferred or sold
	Capital can be raised by sale of additional stocks (securities)
	A change in ownership may not affect the management, thus allowing a continuation of operation
	Fringe benefits, such as life and medical insurance, travel, education and retirement benefits may also be available to stockholders if also employed by the corporation (some restrictions apply)
	Stockholders' personal assets are protected from the act of the corporation
Disadvantages:
	There are numerous formalities and filing requirements to set up a corporation
	Most states impose income taxes on the corporations that are not applicable to sole-proprietorship or partnership
	After set up, corporate protocol (minutes & renewal requirements) must be maintained
	Many states require annual meetings and documentation of such stockholders meetings
	A corporate resolution is generally required to make any changes in the board of directors/officers

As you can see, a corporate set up appears to be a cumbersome process. There are corporate formalities to set up a corporation, filing requirements, and not to mention costs. Usually the cost depends on the state of incorporation: it may cost anywhere between $300 to $750. Then the question is as to why it is the most common and popular way of conducting business.

Well, among other things, it is relatively easy and cost affordable to set up. It provides personal protection to the officers and employees. It has features of perpetual continuation and the ease of transfer of stock ownership. Most importantly, it provides legal protection to the stockholders/owners in case of litigations, debt collections, and/or bankruptcies.

The corporate shield and protections, however, are not automatic. Many state and federal laws interact and require some formalities that must be maintained. The following are Do's and Don'ts of corporate protocol.

Must Dos:
1.	Have an initial meeting of the stockholder
2.	Maintain a corporate stock certificate log
3.	Have major contracts and events ratified by having a special meeting of the stockholder
4.	Maintain a corporate minute book
5.	Renew your corporation (be in compliance) as required by your state
Must Not Dos:
1.	Do not co-mingle your personal funds and assets with that of corporate funds/assets
2.	Do not use corporate structure to cover unlawful activities
3.	Do not use the corporation as your alter ego
4.	Do not let the "corporate shield" be pierced, known as "corporate veil"
5.	Pay corporate debts with corporate funds only

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