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How a Business Is Formed

7 courses, in the order they are meant to be taken. You can start anywhere, and they build.

How to read the course codes
  • -00 means start here.
  • -01, -02 are steps on one path, in order.
  • A letter (-T1, -P2) marks a track. Tracks run in parallel: take any track you like, in any order, without taking the others.
  • -99 is the capstone. Take it last.

The path

  1. ENTITY-01

    What a Business Entity Actually Is

    Step 1 on the single path through this series.

    A cited, high-school-and-up method course on how a business is formed. It is not legal or tax advice, and it says so throughout: it teaches you what to ASK a lawyer or accountant, not the answer for your situation. The organizing idea is that any business entity is a bundle of FOUR decisions: who pays the debts (liability), who pays the tax (taxation), who owns it and how ownership moves (ownership and transfer), and who gets to decide (governance). Every form on earth, in every country, is a different answer to those four, so a learner who holds the four questions can read a form they have never seen. You will learn to read the FORMATION DOCUMENTS as primary sources: the articles of organization or incorporation, the operating agreement or bylaws, and the state's own filing portal. Then you take a first pass over the US forms (sole proprietorship, partnership, LLC and C-corporation) and settle the single most common misunderstanding in the subject: the S-corp is a TAX ELECTION, not an entity type. This is the general case of which the shipped course 'What They Built' is a worked example, where fraternal orders and building-and-loan associations turned out to be entity choices. The capstone asks you to pick a form for a real scenario and defend it against the four decisions.

  2. ENTITY-02

    The US Forms: Sole Prop to Corporation

    Step 2 on the single path through this series.

    A cited, high-school-and-up survey of the US business forms, and the direct sequel to 'What a Business Entity Actually Is.' It is not legal or tax advice, and it says so throughout: it teaches you what to ASK a lawyer or accountant, not the answer for your situation. Course 1 gave you the method, that any entity is a bundle of FOUR decisions (who pays the debts, who pays the tax, who owns it and how ownership moves, and who decides). This course applies that method across the actual US menu: the sole proprietorship and general partnership you can fall into without filing, the limited partnership and the LLP that add a liability wall, the LLC that became the modern default, the C-corporation built to raise money, and the nonprofits, where 501(c)(3), (c)(4) and (c)(6) are three different deals with three different rules on donations and politics. Two ideas get a full lesson each because they are the most misunderstood in the subject. First, the S-corp is a TAX ELECTION, not an entity type: it changes only how a business is taxed and leaves liability, ownership and governance to the entity underneath it. Second, a benefit corporation (a legal form a state recognises) is not the same thing as a Certified B Corp (a private certification granted by the nonprofit B Lab), two different things that most content blurs. The organizing insight is that a real menu mixes three kinds of thing, an entity, a tax status, and a private certification, and telling them apart is most of the skill. The capstone asks you to match a real scenario to a form and defend it against the four decisions, and against a specific alternative you rejected.

  3. ENTITY-03

    Cooperatives

    Step 3 on the single path through this series.

    A cited, high-school-and-up course on the business form most people have used without ever reading: the cooperative. It is not legal, tax or financial advice, and it says so throughout. The organizing idea is one line, and the whole course is a consequence of it: a cooperative answers the ownership and governance questions with ONE MEMBER, ONE VOTE, not one share, one vote, which makes capital the servant of the members rather than their master. You will read the co-op against the four decisions from course 1 (liability, taxation, ownership and transfer, governance), then meet the Rochdale Pioneers who opened a store in 1844 and left behind the principles the world still uses, codified today as the seven cooperative principles of the International Co-operative Alliance. You will learn the five main types, worker, consumer, producer, housing and purchasing, and then study three worked cases that prove the form is not a curiosity: Mondragon, one of the largest worker cooperatives in the world, and the honest debate about whether it still lives up to its ideals; the rural electric cooperatives that, under the Rural Electrification Act of 1936, brought power to an America the private utilities would not serve; and the credit union, a financial cooperative built under the Federal Credit Union Act of 1934 that a large share of Americans belong to without thinking of it as a co-op at all. The last section takes on the money and governance question head on: how a co-op shares surplus through patronage dividends, why raising member capital is its hardest problem, and how the whole structure can be reversed through demutualization, the same move the building societies made in the financing course. The capstone asks you to design a cooperative for a real scenario and defend its member governance against a plain corporation, in the language of the four decisions. Where accounts disagree, this course teaches the disagreement rather than smoothing it over.

  4. ENTITY-04

    Financing Without Access

    Step 4 on the single path through this series.

    A cited, high-school-and-up course on the oldest problem in business: how do you finance anything when the credit system will not have you? It is not legal, tax, financial or religious advice, and it says so throughout. The through-line is a single idea, tested across the world: when the capital system excludes you, you invent an entity. You will meet the fraternal benefit society and the friendly society, the burial club and industrial insurance, the building and loan association that carried excluded families into homeownership, the rotating savings and credit association that runs under a dozen names on six continents (susu, tanda, chit fund, hui, kye, ekub, tontine), and the structures of Islamic finance that finance real things without charging interest at all (murabaha, ijara, mudaraba, musharaka, sukuk, takaful). This is the general case of which the shipped course 'What They Built' is a worked example, where fraternal orders and building-and-loans turned out to be entity choices, and it extends the method of course 1, 'What a Business Entity Actually Is': every one of these is a different answer to the four decisions. Along the way you will learn to read any financing workaround the same way, by asking which door was closed, what pool replaced it, and who bears the risk. The capstone asks you to document one real financing-without-access institution and show how its entity choice fit its constraint. Where accounts disagree, this course teaches the disagreement rather than smoothing it over.

  5. ENTITY-05

    How Other Countries Form Businesses

    Step 5 on the single path through this series.

    A cited, high-school-and-up tour of how businesses are formed outside the United States, and the fifth course in the 'How a Business Is Formed' path. It is not legal or tax advice, and it says so throughout, doubly so for foreign law you cannot casually check: it teaches you what to ASK a professional, not the answer for your situation. Course 1 gave you the method, that any entity is a bundle of FOUR decisions (who pays the debts, who pays the tax, who owns it and how ownership moves, and who decides), and course 2 walked the US menu as the baseline. This course carries the same four questions abroad to prove the one thing the US baseline cannot: the American set of forms is not universal. You will read the United Kingdom's private limited company, public limited company, and the community interest company with its asset lock; Germany's GmbH and AG, their two-tier board, and Mitbestimmung, the mandatory worker representation on the supervisory boards of large companies that connects straight to the unions track; France's rigid SARL and flexible SAS; Japan's kabushiki kaisha; the Nordic countries, where the one-member-one-vote cooperative the US treats as niche is a mainstream, mass-membership institution; China's state-owned enterprises and the VIE structure, a contractual workaround of contested legality that is not an entity type at all; and India's private limited company and its Section 8 not-for-profit company. Every difference is read as a policy choice with consequences, not an accident of translation, and where a form's legal standing is genuinely debated, the VIE above all, the course teaches the uncertainty rather than faking an answer. The capstone asks you to match a foreign form to its nearest US form using the four decisions, and then to name, honestly, what does not translate.

  6. ENTITY-06

    Governance: Who Actually Decides

    Step 6 on the single path through this series.

    A cited, high-school-and-up course on corporate and organizational governance, and the sixth course in the 'How a Business Is Formed' path. It is not legal or financial advice, and it says so throughout: it teaches you what to ASK a lawyer or a governance professional, not the answer for a real company or a real investment. Course 1 taught that any entity is a bundle of four decisions, and governance was the fourth: who gets to decide? This course takes that one decision to its depth. The spine is the gap between OWNING a business and DECIDING for it. In a large company the owners are many and scattered, and the people who actually run it are few, so governance is the set of devices that keep the deciders answerable to the owners. You will learn what a board of directors is and does, how directors are elected, why independent directors and board committees exist, and the long argument over whose interests a company serves: shareholders alone, or a wider set of stakeholders. You will learn fiduciary duty, the highest obligation the law puts on a director, split into the duty of care (protected by the business judgment rule) and the duty of loyalty (which conflicts of interest test). You will see how founders concentrate control through dual-class, super-voting shares, and how other systems answer the same question differently: the German two-tier board with worker codetermination, the cooperative's one member one vote, and the nonprofit board that answers to a mission rather than to owners. The capstone asks you to read a real governance structure, say who actually decides, and find where a minority owner's protection comes from.

Finish here

  1. ENTITY-99

    Capstone: Choose a Form and Defend It

    Capstone. Take it last: it works by using what the rest of the series taught you.

    The final course of the 'How a Business Is Formed' path, and its graded capstone. It is not legal, tax, or financial advice, and it says so throughout, including inside the assignment: it teaches you what to ASK a lawyer or accountant, not the answer for your situation. This course does not teach a new form. It teaches you to REASON: given a real scenario, read it into the four decisions (who pays the debts, who pays the tax, who owns it and how ownership moves, and who decides), choose a plausible form, and defend that choice against all four decisions and against one specific alternative you rejected. It pulls the whole path together, the four decisions and the formation documents from course 1, the US forms and the S-corp-as-a-tax-election from course 2, cooperatives and one member one vote from course 3, the invent-an-entity story of financing without access from course 4, the foreign forms from course 5, and governance from course 6. You will work three or four scenarios end to end, a solo freelancer, a founder raising venture money, a worker collective, and a community nonprofit, watching the trade-offs and the honest 'it depends' at each step, without asserting a single invented statute, rate, or fee. Then the graded capstone asks you to do it yourself: pick a scenario, name a form, and defend it against the four and against a named alternative, to a rubric. You are not proving you know the one right answer. You are proving you know the questions.