Incorporation means creating a new corporation. A corporation is an organization that is approved by your state to conduct business. It is a legal entity separate and distinct from its owners; a separate person in the eyes of the law.
Most people form corporations to protect their personal assets because the owners of a corporation are generally not personally responsible for the corporation’s debts. This is called “limited liability protection.”
The creation of this entity generally requires the preparation and filing of certain documents with The Secretary of State (or other appropriate department) in your state of formation, and running the corporation generally requires more formality than is required for most types of businesses. The corporation is formed by an incorporator, owned by shareholders, managed by directors and typically operated by its officers.