Besides your management team, or founding team, the people you need most when starting a company are a lawyer, an accountant, an insurance broker and a banker. Your lawyer and your accountant will help you decide what kind of corporation to form and where to incorporate; they will help you complete basic corporate and tax documentation.

Corporations - A corporation has a legal existence separate from its owners, which means it can own property, sue and be sued, have bank accounts, and borrow money. In theory, establishing a corporation enables you to invest in your business without risking all your personal assets, but in fact most major lenders will demand that you personally guarantee any loans. Incorporating can shield you from personal liability for some business-related lawsuits, however, such as when your employee accidentally harms someone on company time. In the United States, there are two types of corporations for tax purposes: C and S. An additional category is the limited liability company.

C Corporations - These corporations pay taxes and are usually advantageous for very successful businesses with substantial profits, as well as for venture-backed businesses and businesses that will go public. When you form a corporation, it automatically becomes a C corporation for tax purposes unless you specify S. Note that a corporation can begin as an S, and later become a C.

If you choose a C, you can split the income your business earns with your corporation and save on taxes, since corporate rates are lower than personal rates. Splitting your income also means that you don't have to pay Social Security and Medicare taxes on profits you retain in your corporation. You can keep up to $250,000 of your business earnings in your corporation. Finally, C corporations can provide you with fringe benefits, then you can deduct the entire cost from the corporation's income as a business expense.

S Corporations - S corporation income and losses are passed through directly to shareholders, who must split the taxable profit according to their ownership and report the income on their individual tax returns. In other words, S corporations do not pay taxes themselves; rather, their owners pay taxes on their earnings. Taxes are much simpler than for C corporations; you get the limited liability of a corporation owner, and you also save on self-employment taxes. You can't split income on S corporations, but this is only an issue if your business earns enough money. S corporations can also save you on your personal Social Security and Medicare taxes because you don't have to pay these taxes on distributions from your S corporation; the larger your distribution, the less taxes you'll pay. The IRS requires you to pay yourself a reasonable salary, but you can receive other income in the form of distributions. There are some restrictions on S corporations: 1) they can only have up to 75 shareholders; 2) none of the shareholders can be nonresident aliens; 3) they can only have one class of stock; 4) shareholders can only be individuals, estates or certain trusts - no corporations.

Limited Liability Companies (LLCs) - An LLC offers the same limited liability as a corporation, but IRS rules allow you to decide for yourself how you want your LLC to be taxed - like a sole proprietorship, in which you and your business are one and the same, like an S corporation, or like a C corporation. An LLC is simpler to run than a corporation because you need not hold and record meetings to transact corporate business and because you have more flexibility in allocating profits and losses among owners. On the other hand, LLCs don't offer the opportunity to save on self-employment taxes, as the S corporation does.