Businesses that are engaged in operations that are considered "risky" or subject to frequent lawsuits are often encouraged by their legal advisors to incorporate. Moreover, the corporate structure can make it much easier to obtain investment capital and to pass the business down to the owner's children or other successors upon death or retirement.

From a tax perspective, there are two options for corporations under federal income tax law:

• C corporations are what we normally consider "regular" corporations and are subject to the corporate income tax.
• S corporations are corporations that have filed a special election with the IRS. They are not subject to corporate income tax but are treated as similar (but not identical) to partnerships for tax purposes.

There are a number of nontax factors that may influence your decision as to whether a corporation is the right form of business for you, and we recommend that you seek expert legal advice in setting up a corporation and writing up the articles of incorporation.