Incorporation is the process of registering your business as a corporation. Corporations are controlled by three different parties—shareholders, directors, and officers. Shareholders own the corporation (by purchasing stock) and elect a board of directors, who decide matters of policy and management. The board appoints officers (CEO, CFO, secretary, etc.) who run the corporation on a daily basis.
The primary benefit to business incorporation is limited liability. When you own a small business, you will invest a lot of money into not only getting it launched, but in keeping it running smoothly as well. As the owner you are responsible for any debts and losses your business may accumulate along the way. However, when you incorporate, you are typically only held responsible for the amount of money you personally invest. Your personal assets typically cannot be used to satisfy the debts and liabilities of your business.
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