Top Five Mistakes in Forming Your Corporation

By Brad Sugars of Entrepreneur.com



In my September column, we looked at mistakes to avoid when forming a partnership. Many entrepreneurs, however, aren't comfortable in remaining a sole entity and require a level of legal protection not afforded by a sole proprietorship.

That leaves a corporation or LLC as the next most viable option for a start-up.

While some owners think incorporation is only for "big" companies, there are a number of reasons even "small" entrepreneurs should think about incorporating, mainly from the standpoint of personal liability protection.

In the U.S., each state governs the corporation structure and its own legal requirements for forming one. Generally, a corporation is treated under the law as an individual person, with full legal standing, and may own property, sue and be sued, and enter into or make contracts....