When you go to form a corporation, people talk about whether you should have a corporation or an LLC. If you’re going to have a corporation you need to file articles incorporation just like you would with an LLC. The difference is that on an LLC you have an operating agreement, which tells you how to run the company. This agreement is 20 or 30 pages long and it gives you an idea of what it takes to make decisions, how they’re made, and who has control. In a corporation, you file your articles of incorporation and you have 250 years of corporate law behind you which tells you that the shareholders elect the directors and the directors elect the officers, that the officers appoint the employees and thousands of rules surrounding it. So if you have a day-to-day operating entity, you really want it to be a corporation, just for those control issues. There are other tax issues that come into consideration but they are far and above outweighed by the control issues associated with a serve you got a day-to-day operating entity to really want to be a corporation versus an LLC. One more issue, when you go to form a corporation, it’s much easier to hand out ownership interest to your people you want to give stock to than it is in an LLC.
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