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Small Business - Corporations. A corporation is a legal entity that has a "perpetual existence" separate from the individual(s) who create, own and run the corporation. A company can be a state or federal corporation. Federal incorporation is used if business will be conducted in more than one state or outside the U.S. State incorporation is used if all business will be conducted in one state. The owners of a corporation are its shareholders, who buy into the corporation by providing money, goods or services to the corporation in exchange for shares. Shareholders do not own the assets of the corporation and generally are not responsible for any of its debts of liabilities. If a corporation has financial difficulties, its shares may lose their value, but creditors of the corporation cannot normally look to the shareholders to pay off corporate debts or liabilities.
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