Ipas

Inc.

Inc. is a term commonly used as an abbreviation for "Incorporated," which signifies a type of legal business structure. An incorporated company is a distinct legal entity that is separate from its owners, providing them with limited liability protection. This means that the personal assets of the shareholders are protected from the company's debts and liabilities.

History

The concept of incorporation dates back to ancient times, but the modern form of incorporation began in the 19th century. The Joint Stock Companies Act 1844 in the United Kingdom and the General Incorporation Law in the United States were pivotal in shaping the modern corporation.

Legal Structure

Incorporation involves the creation of a legal entity that is recognized by the state. This process typically requires the filing of articles of incorporation with the relevant state authority, such as the Secretary of State in the United States. The articles of incorporation outline the basic details of the company, including its name, purpose, and structure.

Advantages

• Limited Liability: Shareholders are only liable for the amount they have invested in the company.
• Perpetual Existence: The corporation continues to exist even if the owners or major shareholders change.
• Transferability of Shares: Shares can be bought and sold, allowing for easy transfer of ownership.
• Access to Capital: Corporations can raise capital more easily through the sale of stock.

Disadvantages

• Double Taxation: Corporations may face double taxation, where the company's profits are taxed and shareholders are also taxed on dividends.
• Regulatory Requirements: Corporations are subject to more regulations and reporting requirements.

Types of Corporations

• C Corporation: The most common form, subject to corporate income tax.
• S Corporation: Offers pass-through taxation, avoiding double taxation.
• Nonprofit Corporation: Organized for charitable, educational, or other purposes, and may be tax-exempt.

Incorporation Process

1. Choose a Business Name: The name must be unique and comply with state regulations. 2. File Articles of Incorporation: Submit the necessary documents to the state authority. 3. Appoint Directors: Initial directors are appointed to manage the corporation. 4. Create Bylaws: Establish the rules for the corporation's operations. 5. Issue Stock: Distribute shares to initial shareholders. 6. Obtain Licenses and Permits: Acquire any necessary business licenses.

Also see

• Limited Liability Company
• Partnership
• Sole Proprietorship
• Corporate Governance
• Business Law