What is a Corporation?

A corporation is a legal entity that the law recognizes as separate from its owners, that limits the liability of its owners for the risks of the business conducted by the corporation. It is a way of keeping the owners' personal assets free of the risks of the business.

Corporations are created by filing formation documents with a state. Once created, the corporation must have a board of directors, certain officers and shareholders. All of the states have laws that authorize the formation of corporations in that state. Those laws also govern what the corporation can do. In some cases, one state's corporation laws also can control the behavior of corporations that are created under the laws of another state.