It used to be easy. There was a basic choice: do you want to incorporate to limit your liability or not? Everybody at least thought they knew what shareholders, directors and officers did.
Now there are all different kinds of juridical entities (essentially government created "persons"), such as:
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Stock corporations, which come with shareholders, directors and officers. Normally there is limited liability for shareholders. |
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Close corporations, which can eliminate some traditional structures (such as allowing the shareholders to exercise the powers of the board of directors). There are special rules in a number of states (for example, Delaware) which allow such entities. |
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Non-stock corporations. |
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Professional Corporations, are allowed to practice a profession, such as law or medicine. |
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Ecclesiastical corporations (essentially corporations used for church purposes). |
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Specially chartered corporations (which are created specially by the legislature). |
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General Partnerships. |
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Limited Partnerships. |
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Limited Liability Partnerships (sometimes called LLPs). |
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Limited liability companies (sometimes called LLCs). These are usually established as a tax "pass through" entity, which means they pay tax only once (most corporations pay taxes twice; the corporation pays taxes and the shareholders pay tax on dividends they receive). They can be operated by the members (the owners) or by managers. There is limited liability for the member/owners. |
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Trusts. |
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Statutory trusts, which sometimes offer limited liability. |
Each state has its own corporation law (all of which differ slightly). While a corporation may be formed in Delaware (like most of the Fortune 500 corporations), it can have operations throughout the United States. If those operations are substantial enough in a state, it must qualify to "do business" in that state (which is fairly easily done through a registration process). Sometimes there is an advantage to forming a corporation in a particular state (for instance, Delaware cannot change its corporation law without a two thirds majority of its legislature). Most corporations are formed in the state where they expect to do most of their business or in Delaware.
Minority owners of business can object to actions by the majority under certain circumstances. In corporations, dissenting shareholders can have their shares appraised under certain circumstances, forcing the majority shareholders to essentially to buy them out. Minority shareholders have certain rights when they are unlawfully oppressed.