Company formation is the process of legally establishing a business entity. This involves choosing a business structure, such as a sole proprietorship, partnership, limited liability company (LLC), or corporation. Entrepreneurs must also register their business name, obtain necessary licenses, and comply with local regulations. Once the business is formed, it gains legal recognition, allowing it to operate, enter contracts, and open bank accounts. Proper formation helps protect personal assets from business liabilities and can provide tax benefits. Understanding the requirements in your jurisdiction is essential for a successful start.