Incorporation

You can operate a business as proprietorship/partnership or through a corporation.  A proprietorship is a business operating by one person and partnership is a business operated by 2 or more people. A corporation once created is a completely separate legal person that can own property and in most respects is treated as a separate person. Unless you are operating as registered limited liability partnership, partners and a proprietor are liable for the debts of their business.

The main reasons that business is done through a corporation is taxes and limited liability of shareholders. There are potential tax savings to incorporation from using the small business tax rate and other tax rules that you would want to review with a tax professional. The main legal advantage is that the shareholders a are not liable for the debts of the corporation. So if a corporation owes creditors, the shareholders do not have to pay those debts unless that shareholder has personally guaranteed the debt. So that provides a shareholder with some protection from the creditors of corporation.

A corporation may also provide you business with additional name protection that a proprietorship or partnership does not.