Nevada is a popular place to incorporate.
A corporation is a business form that enables owners to separate their liability from that of the business--a "limited liability" entity. The corporation takes two main forms in the United States--the S-corporation and the C-corporation. The S-corporation is a "pass-through" entity, meaning it is not taxed at the corporate level, but profits and losses pass through to the owners' individual tax returns. A C-corporation is not a pass-through entity--it is taxed at the corporate level.
Entrepreneurs use corporations chiefly to protect their own personal assets from being subject to creditor claims arising from business liabilities. A corporation can go bankrupt without taking the owner's home and other personal assets down with it.
Instructions
1. Obtain a Taxpayer ID Number from the Internal Revenue Service by visiting their TID online application.
2. Download and complete the State of Nevada Articles of Incorporation.
3. Obtain a Nevada state business license, as well as one from the city in which you intend to domicile your corporation. A Nevada business license costs $200, as of September 2010, and must be renewed each year.
4. Open a separate checking account. To qualify for limited liability, you must treat the corporation as a wholly separate entity from yourself. Do not commingle corporate funds with personal funds.
