Where should you form your corporation?

It's usually best to form a corporation in your home state, where you conduct most of your business. If you form a corporation out of state, you'll then have to register and pay fees to do business in your own state.

Corporation or LLC — which is better?

You probably know it’s advantageous to use a business structure that limits the personal liability of the owners – that is, a corporation or an LLC. But which one is better for you?

Most people starting a small business prefer a limited liability company (LLC). Like a corporation, an LLC effectively provides a personal shield from business liabilities. LLCs also allow profits and losses to be taxed on the owners’ tax returns (called pass-through tax status). Corporations, by contrast, are taxed both at the corporate level and when salaries or dividends are paid to owners. And corporations must hold formal meetings and keep detailed minutes.

Corporations are often preferred by entrepreneurs who wish to raise capital through stock sales or retain (or shelter) money in the corporation at lower initial corporate tax rates.

Choosing an ownership structure is an important decision. For more about your options, read Corporations vs. LLCs.