Incorporated

Incorporated refers to the formation of a new corporation. The process of incorporation involves writing up a document known as the articles of incorporation and submitting it to the state in which the corporation is to be established. Once the corporation is successfully incorporated, it becomes its own legal entity, separate from those who founded it. This new entity corporation can be a non-profit organization, a start-up, a small business, or a multinational corporation.

Process of Incorporation

The process of incorporation requires the following steps:

1. Choosing a Business Name: The name of the corporation must be unique and not similar to any existing corporation within the state. The name must end with an incorporation identifier such as "Inc." or "Incorporated".
2. Filing Articles of Incorporation: The articles of incorporation, also known as the certificate of incorporation, is a document that establishes the existence of a corporation in the United States and Canada. It includes information such as the corporation's name, street address, agent for service of process, and the amount and type of stock to be issued.
3. Paying Filing Fees: The state will require a filing fee to process the articles of incorporation. The amount of the fee varies by state.
4. Establishing Corporate Bylaws: The bylaws of a corporation are an internal document that details the operating rules for the corporation. It is not submitted to the state.
5. Appointing Directors: The initial directors are those who will oversee the affairs of the corporation until the shareholders meeting where new directors are elected. The names and addresses of the initial directors are usually required in the articles of incorporation.

Benefits of Incorporation

Incorporation offers several benefits to businesses and their owners, including:

1. Limited Liability: If the corporation incurs debt or faces legal action, the corporation's shareholders' personal assets are protected. Shareholders can generally only be held accountable for their investment in stock of the company.
2. Transferable Ownership: Ownership in a corporation is typically easily transferable to others, either in whole or in part.
3. Perpetual Existence: Corporations can continue indefinitely, even if ownership or management changes. Surviving partners do not need to buy out the shares of a deceased or bankrupt partner.
4. Tax Advantages: Corporations often gain tax advantages, such as the ability to deduct expenses like salaries and business expenses.

See Also

• Limited Liability Company
• Partnership
• Sole Proprietorship
• Non-profit Organization

References

Incorporated Resources
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