From Startupping Wiki
[edit] Incorporating
Anyone who operates a business, alone or with others, may incorporate. There are many advantages to incorporating your business especially when it comes to protection. Creditors of the corporation cannot hold the owners of the business personally liable for debt. Because stock or equity can be sold, it is much easier for a corporation to raise capital. Ownership of an incorporated business can also be transferred when a company is incorporated.
There are a few types of business entities: a General Corporation or C Corporation, an S Corporation, and a Limited Liability Corporation (LLC). A C corporation, is the most common corporate structure. A general corporation may have an unlimited number of stockholders. Consequently, it is usually chosen by those companies planning to have more than 30 stockholders or large public stock offerings. Since a corporation is a separate legal entity, a stockholder's personal liability is usually limited to the amount of investment in the corporation and no more. An S Corporation is a general corporation that has elected a special tax status with the IRS after the corporation has been formed. Subchapter S corporations are most appropriate for small business owners and entrepreneurs who prefer to be taxed as if they were still sole proprietors or partners.
The LLC is not a corporation, but it offers many of the same advantages. Many small business owners and entrepreneurs prefer LLC because they combine the limited liability protection of a corporation with the "pass through" taxation of a sole proprietorship or partnership (the treatment of dividends and their effective tax rates are different, you should really run the numbers, especially if you are bootstrapping. a Sub-S is typically substantially more favorable on an after tax basis (including use of dividends to offset wage income to shareholders) and operates with much more settled law). The biggest difference between an S Corporation and an LLC is that the S Corporation must have a board of directors, where as an LLC can be managed by the owner or an owner-appointed manager. Depending upon the ownership mix this is no difference at all. Also board minutes and filing are pro forma take perhaps 15 minutes per year, this gets overstated in a lot of analyses (not here).
For a more specific comparison of the different types of corporate entities, see Types of Corporate Entities
[edit] Patents
A patent is a document issued by the U.S. Patent and Trademark Office (PTO) that grants exclusive for a limited period of time on the manufacture, use, and sale of an invention. These exclusive rights last between 14 and 20 years, depending on the type of invention. A patent gives you the right to exclude others from making, using, offering for sale, or selling your invention in the United States or importing your invention into the United States. Once a patent is issued, it becomes your responsibility to enforce the patent, the USPTO will not enforce your rights for you. From the USPTO you are only granted rights that are honored within the United States, U.S. territories, and U.S. possessions.
The type of patent for a Web 2.0 company would be a utility patent, which covers a process or method for producing a useful, concrete, and tangible result. The cost of patenting will vary depending on the patent claims -- the parts of a patent which define the boundaries and legal basis of the patent protection. There is a $150 filling fee, a $650 fee if your patent is approved and issued, and $450, $1150, $1900 for maintenance fees paid at 3 1/2, 7 1/2, and 11 1/2 years after your patent is granted.
[edit] Funding documents
These documents are being provided as examples only. There are no representations or warranties. Even common sense would tell you to review these agreements with licensed attorney before using them.