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Encyclopedia > Incorporation (business)

Incorporation (abbreviated Inc. in U.S. business names) is the forming of a new corporation. The corporation may be a business, a non-profit organization or even a government of a new city or town. This article focuses on the process of incorporation, see also corporation. Image File history File links Nuvola_apps_browser. ... A corporation is a legal person which, while being composed of natural persons, exists completely separately from them. ... A nonprofit organization (abbreviated NPO, or non-profit or not-for-profit) is an organization whose primary objective is to support some issue or matter of private interest or public concern for non-commercial purposes. ... Chicago from the air. ... Main street in Bastrop, Texas, a small town A town is a residential community of people ranging from a few hundred to several thousands, although it may be applied loosely even to huge metropolitan areas. ... A corporation is a legal person which, while being composed of natural persons, exists completely separately from them. ...

Contents

Incorporation in the United States

Legal benefits

  • Protection of personal assets. Safeguarding personal assets against the claims of creditors and lawsuits. Sole proprietors and general partners in a partnership are personally and jointly responsible for all the liabilities of a business such as loans, accounts payable, and legal judgements. In a corporation, however, stockholders, directors and officers typically are not liable for their company's debts and obligations. They are limited in liability to the amount they have invested in the corporation (eg: If $100 in stock was purchased, no more than $100 can be lost). Corporations and Limited Liability Companies (LLCs) may also hold personal assets like houses, cars or boats. If one is personally involved in a lawsuit or bankruptcy, these assets may be protected. A creditor of the owner of a corporation or LLC cannot seize the assets of the company, however, they can seize their ownership shares in the corporation, as that is considered a personal asset.
  • Transferable ownership. Ownership in a corporation or LLC is easily transferable to others, either in whole or in part. Some states' laws are particularly attractive to this end. For example, with a Delaware Corporation, the transfer of ownership in a corporation is not required to be filed or recorded.
  • Retirement funds. Retirement funds and qualified retirement plans (like 401ks) may be set up more easily with a corporation. Corporations can also fully deduct the cost of paying its owner's health insurance.
  • Taxation. In the United States, corporations are taxed at a lower rate than individuals. Also, they can own shares in other corporations and receive corporate dividends 80% tax-free. There are no limits on the amount of losses a corporation may carry forward to subsequent tax years. A sole proprietorship, on the other hand, cannot claim a capital loss greater than $3,000 unless the owner has offsetting capital gains.
  • Raising funds through sale of stock. Capital from investors can be raised for corporations easily through the sale of stock.
  • Durability. A corporation is capable of continuing indefinitely. Its existence is not affected by the death of shareholders, directors, or officers of the corporation.
  • Credit rating. Regardless of an owner's personal credit scores, corporations acquire their own credit rating, and build a separate credit history by applying for and using corporate credit.

In the common law, a partnership is a type of business entity in which partners share with each other the profits or losses of the business undertaking in which they have all invested. ... In the most general sense, a liability is anything that is a hindrance, or puts one at a disadvantage. ... A shareholder or stockholder is an individual or company (including a corporation), that legally owns one or more shares of stock in a joint stock company. ... In relation to a company, a director is an officer of the company charged with the conduct and management of the affairs of the company. ... A chief executive officer (CEO), or chief executive, is the highest-ranking corporate officer or executive officer of a corporation, or agency. ... A limited liability company (denoted by L.L.C. or LLC in the US) is a legal form of business company in the United States offering limited liability to its owners. ... The examples and perspective in this article or section may not represent a worldwide view. ... A Delaware corporation is a corporation chartered in the state of Delaware in the United States. ... The 401(k) plan is a type of retirement plan available in the United States. ... A tax (also known as a duty) is a financial charge or other levy imposed on an individual or a legal entity by a state or a functional equivalent of a state (e. ... The examples and perspective in this article may not represent a worldwide view. ... A credit rating assesses the credit worthiness of an individual, corporation, or even a country. ...

Steps for incorporation

  • The filing of the Articles of Incorporation (also called a Charter, Certificate of Incorporation or Letters Patent). The first step is to check with your state's corporate filing office (usually either the Secretary of State or Corporations Commissioner) and federal and state trademark registers to be sure the name you want to use is available. You then fill out a preprinted form (available from commercial publishers or your state's corporate filing office) listing the purpose of your corporation, its principal place of business and the number and type of shares of stock. You'll file these documents with the appropriate office, along with a registration fee which will usually be between $200 and $1,000, depending on the state.
  • How to Select a Corporation's Name. A corporate name is generally made up of 3 parts: "Distinctive element", "Descriptive element", and a legal ending. All corporations MUST have a distinctive element and a legal ending to their names. Some corporations choose not to have a descriptive element. In the name "Tiger Computers Inc." the word "Tiger" is the distinctive element; the word "Computers" is the descriptive element; and the "Inc." is the legal ending. The legal ending indicates that it is in fact a legal corporation and not just a business registration or partnership. You can choose from the following words: Incorporated, Limited and Corporation, or their respective abbreviations: Inc., Ltd. and Corp.
  • You'll also need to complete (but not file) Corporate Bylaws. These will outline a number of important corporate housekeeping details such as when annual shareholder meetings will be held, who can vote and the manner in which shareholders will be notified if there is need for an additional "special" meeting.


Taxation- Coporations can only deduct net operating losses going back two years and forward 20 years The Articles of Incorporation (sometimes also referred to as the Certificate of Incorporation or the Charter) are the primary rules governing the management of a corporation, and are filed with a state or other regulatory agency. ... Alternate use, see charter airline, yacht charter, bare-boat charter or Charter Communications. ... A certificate of incorporation is a legal document relating to the formation of a company or corporation. ... Letters Patent by Queen Victoria creating the office of Governor-General of Australia Letters patent are a type of legal instrument in the form of an open letter issued by a monarch or government granting an office, a right, monopoly, title, or status to someone or some entity such as... In several countries, Secretary of State is a senior government position. ... In the common law, a partnership is a type of business entity in which partners share with each other the profits or losses of the business undertaking in which they have all invested. ... A bylaw (sometimes also seen as by-law or Byelaw) was originally the Viking town law in the Danelaw. ...


Reporting after incorporation

  • Assuming your corporation has not sold stock to the public, conducting corporate business is remarkably straightforward and uncomplicated. Often it amounts to little more than recording key corporate decisions (for example, borrowing money or buying real estate) and holding an annual meeting. Even these formalities can often be done by written agreement and don't usually necessitate a face-to-face meeting.

You may also be required to file an annual report with the Secretary of State's office of the states you are incorporated and authorized to transact business in. Annual Report Requirements (due dates, information the Secretary of State requests, fees) vary from state to state. For specific information on your company contact the state you are incorporated in or qualified in or request assistance from any number of Annual Report Service Companies like Annual Registration Management Services, LLC or CT Corporation.


International perspective on incorporation

The legal concept of incorporation is recognized all over the world. In the United States, corporations are identified by the term "incorporated" added after the business name, such as "Texas Instruments, Incorporated", or by putting the word corporation in the name of the company, as in "Netscape Communications Corporation". In Germany, Austria and Switzerland the GmbH ("limited liability business association"), as well as the AG ("stock market traded business association") are the most common comparable concepts. In the United Kingdom the titles Ltd. (abbreviation for limited company) or plc (abbreviation for public limited company) are used for corporations. In France, Spain, Portugal, Poland, Romania and South America the title S.A. is used for corporations. Norway uses the title AS for stock corporations (Norwegian: Aksje Selskap), while Sweden uses the similar AB (Swedish: aktiebolag). Italy uses "Srl", or "Societ√† a Responsabilit√† Limitata" (limited liability company) and "SpA" or "Societ√† Per Azioni" (stock corporation). The Netherlands uses NV. Singapore uses Pte. Ltd., meaning "private limited" which is the equivalent of a U.S. incorparated entity. Gesellschaft mit beschränkter Haftung (GmbH or GesmbH) is a type of legal entity created in Germany in 1892. ... The German term Aktiengesellschaft (IPA /aktsiÉ™ngÉ™zεlʃaft/) (abbreviated AG) means a corporation which is limited by shares, , owned by shareholders. ... It has been suggested that this article or section be merged into Limited liability company. ... The initials plc after a UK or Irish company name indicate that it is a public limited company, a type of limited company whose shares may be offered for sale to the pubic. ... South America South America is a continent crossed by the equator, with most of its area in the Southern Hemisphere. ... S.A. is the abbreviation of Société Anonyme in French, Spółka Akcyjna in Polish, Sociedad Anónima in Spanish, Sociedade Anónima in Portuguese, or Naamloze Venootschap (N.V.) in Dutch, generally designating corporations in various countries. ... Motto: Je Maintiendrai (Dutch: Ik zal handhaven, English: I Shall Uphold) Anthem: Wilhelmus van Nassouwe Capital Amsterdam1 Largest city Amsterdam Official language(s) Dutch2 Government Parliamentary democracy Constitutional monarchy  - Queen Beatrix  - Prime minister Jan Peter Balkenende Independence Eighty Years War   - Declared July 26, 1581   - Recognised January 30, 1648 (by Spain... The term Naamloze Vennootschap (usually abbreviated NV) is the Dutch terminology for a public limited liability company. ...


See also


  Results from FactBites:
 
Business Incorporation Glossary of Terms (2870 words)
If a corporation is "transacting business" in a state other than where it is incorporated, it must register for a certificate of authority to transact business in the other state or possibly lose access to that state's courts and face fines.
An S corporation, which is limited to 75 or fewer shareholders, provides the benefits of incorporation, but it eliminates "double taxation," which is when the profits of a corporation are taxed first as income to the corporation and then second as income to the shareholders when profits are distributed as dividends.
For tax purposes, the owner and his or her business are one entity, meaning that business profits are reported and taxed on the owner's personal tax return.
Incorporation Business - Incorporate (844 words)
The corporation may be a business, a non-profit organization or even a government of a new city or town.
Incorporation in the rest of the world is recognized.
In the United States, corporations are identified by the term "incorporated" added after the business name, such as "Texas Instruments, Incorporated", or by putting the word corporation in the name of the company, as in "Netscape Communications Corporation".
  More results at FactBites »

 
 

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