Corporate can be defined as a form of business that declares the business as a separate, legal entity guided by a group of officers known as the board of directors.
A corporate structure is perhaps the most advantageous way to start a business because the corporation exists as a separate entity. In general, a corporation has all the legal rights of an individual, except for the right to vote and certain other limitations. Corporations are given the right to exist by the state that issues their charter. If you incorporate in one state to take advantage of liberal corporate laws but do business in another state, you'll have to file for "qualification" in the state in which you wish to operate the business. There's usually a fee that must be paid to qualify to do business in a state.
You can incorporate your business by filing articles of incorporation with the appropriate agency in your state. Usually, only one corporation can have any given name in each state. After incorporation, stock is issued to the company's shareholders in exchange for the cash or other assets they transfer to it in return for that stock. Once a year, the shareholders elect the board of directors, who meet to discuss and guide corporate affairs anywhere from once a month to once a year.
Each year, the directors elect officers such as a president, secretary and treasurer to conduct the day- to-day affairs of the corporate business. There also may be additional officers such as vice presidents, if the directors so decide. Along with the articles of incorporation, the directors and shareholders usually adopt corporate bylaws that govern the powers and authority of the directors, officers and shareholders.
Even small, private, professional corporations, such as a legal or dental practice, need to adhere to the principles that govern a corporation. For instance, upon incorporation, common stock needs to be distributed to the shareholders and a board of directors elected. If there's only one person forming the corporation, that person is the sole shareholder of stock in the corporation and can elect himself or herself to the board of directors as well as any other individuals that person deems appropriate.
Corporations, if properly formed, capitalized and operated (including appropriate annual meetings of shareholders and directors) limit the liability of their shareholders. Even if the corporation is not successful or is held liable for damages in a lawsuit, the most a shareholder can lose is his or her investment in the stock. The shareholder's personal assets are not on the line for corporate liabilities.