While it is not necessary to get an attorney to form a corporation, we at CL King & Associates recommend you to first talk with your attorney or at least your accountant to discuss the matter and make sure you make the right decision without consequences.
There are minor costs associated with incorporation. Once incorporated, you have to deal with the administrative & accounting matters. It is important to understand that the corporate "operating formalities" must be established and then maintained properly for the corporation to legally stand on its own.
Once you have established the corporate entity, you must comply with all the state corporate requirements to keep the corporation in good standing and to retain maximum legal liability protection. Otherwise, if there's some legal or IRS problems, the individual owner might find himself to be responsible for the corporate liabilities and have his personal assets exposed. This is called "piercing the corporate veil".
If the corporation does not keep accurate records of meetings through the minutes and if the corporation co-mingles funds with its owner, it becomes easier for the courts to pierce its corporate veil. Another contributing factor as to why corporate veils get pierced has to do with low capitalization. In some states, like California, we recommend that you capitalize your corporation with at least $1,000. If not, it can be easier for someone to prove that you were simply the alter ego of the corporation. That is, the courts can contend that the corporation and its owners are one and the same.
