There are a few things we need to clarify so that you aren’t lost when a discussion reveals a new term that you’re not familiar with.

* Articles of Incorporation: The actual paperwork filed with a state agency – most often the Secretary of State – to launch the corporation.

* Bylaws: The rules on how your corporation will be structured and governed.  They are usually distributed to shareholders, the board of directors, and any executives within the corporation. 

* Board of Directors: The body of people who control the corporation and make all of the major decisions at a yearly meeting.  The shareholders elect them.

* Officers of the Corporation: This usually includes the President, Vice President, Secretary, and Treasurer – and the Board of Directors elects all positions – yet in many cases, one person wears every hat and holds all of the stock, too!

* Shareholders: Someone who owns stock in the corporation.  You may be the sole shareholder.  There are laws regarding how stock is issued and they vary from state to state.  The only risk a shareholder has is their initial investment of stock and they have no liability for the corporation’s actions or debts.

* Registered (or Resident) Agent: This position is for the person designated to receive any legal papers served to the corporation. 

Now that you have a basic understanding of the terminology, you can easily follow the steps you’ll take to decide if a corporation is the direction in which you want to go.