Wondering about the INC meaning?
What is the meaning of INC?
What does INC mean in business?
In this article, we will break down the mystery behind INC!
We will see what INC stands for, understand its definition, see what it means to have an incorporated business, and understand its differences between Ltd., Co. and LLC.
Are you ready?
Let’s get started!
What does INC. stand for?
In business, INC. stands for incorporated.
An incorporated business is a company that is legally distinct and separate from its shareholders or those who formed it.
There are different types of companies people can use to operate a business.
In the United States, for example, you have different types of corporations allowing you to operate a business with limited personal liability.
The abbreviation “INC” is generally put after a company’s name to signal that this is a corporation or a legal entity.
When you write Apple Inc., you are referring to the Apple corporation.
If you don’t put the Inc and just write Apple, that can potentially lead to confusion as to whether you are referring to Apple as the company or not.
The Cambridge Dictionary defines INC. as follows:
“abbreviation for incorporated: used in the names of U.S. companies that are legally established”
The Collins Dictionary defines INC as follows:
“Inc. is an abbreviation for Incorporated when it is used after a company’s name.”
INC is the abbreviation for the word incorporated or an incorporated business.
What does it mean to be incorporated?
A company that is incorporated means that the company officially exists under the law.
A company can be incorporated in any jurisdiction.
For example, in the United States, a company can be incorporated in Delaware, Florida, California or any other state.
In Canada, a company can be incorporated under provincial laws or federal law.
The moment the company is legally formed under the laws of the applicable jurisdiction, you have an incorporated company.
Impact of incorporation on personal responsibility
The advantage of incorporating a company is that you limit your personal responsibility.
In other words, the incorporated company can pose acts and enter into contracts just like a person.
For example, John can borrow $25,000 from the bank.
In this case, John is personally responsible for the loan at the bank.
If John does not pay the bank, John’s personal assets may be at risk should the bank legally enforce the loan contract.
On the other hand, if John runs a business through his company ABC Inc.
John can go to the bank and have ABC Inc. borrow $25,000 instead.
If ABC Inc. does not reimburse the bank, ABC Inc. will be responsible and not John.
John, as the shareholder of the company, will not have any personal liability except if he personally guaranteed the loan of course.
Technically speaking, the bank could not come after John’s personal assets for the reimbursement of the loan.
Continuity of an incorporated business
A company can exist for as long as it is able to operate and remain profitable.
For example, the Hudson’s Bay Company or HBC was incorporated in 1670 further to an English royal charter!!
In its early days, the Hudson’s Bay Company controlled the fur trade and has evolved over time to become an important department store.
HBC is the oldest company in North America still operating today.
An incorporated company’s shareholders may die and pass away but the company can continue operating.
A company will cease existing when it is dissolved either voluntarily or in bankruptcy.
Company incorporation process
To incorporate a business, you need to follow certain steps and file certain documents with the relevant corporate registry office.
Generally, a company can be incorporated as follows:
- You select the name of your company
- You choose the type of company you want, to use the INC abbreviation, you must be an incorporated business
- You identify the company’s directors
- You identify the company’s shareholders
- You file your articles of incorporation with the applicable state
- You adopt your company bylaws
- You issue shares to the shareholders
Once these formalities have been accomplished, you have a fully formed and operational incorporated business.
Frequently asked questions
Why do companies put “inc” in their names?
Companies put “inc” in their names to ensure that people recognize them as a legal entity.
When a company wants to enter into a contract, for example, it must use its complete name including the INC.
It’s important to put the INC when referring to an incorporated business to ensure that the individuals behind the company or representing the company do not engage their personal responsibility.
What does “Inc.” stand for?
“Inc.” stands for “Incorporated”.
In business, saying that a company is incorporated, it means that a company is legally formed and is distinct from its shareholders and representatives.
What is the difference between Inc. and Ltd.?
Ltd. stands for “limited”.
When you have Ltd in a company’s name, it means you are dealing with a limited company.
This type of company structure is more common in the UK and Canada for instance.
A limited company is similar to an incorporated company whereby the shareholders of the company have limited personal responsibility.
The difference is that the shareholders of a limited company are responsible to the extent of the capital they initially invested.
What is the difference between Inc. and Co.?
Co. is the abbreviation for “Company”.
“Co.” by itself does not mean much or have a particular legal significance.
An incorporated business may us the Co. abbreviation as much as a sole proprietor who does not operate an incorporated business.
What is the difference between an LLC and an INC?
LLC is the abbreviation for “limited liability company”.
A limited liability company is one where a group of people get together, agree to the terms and conditions of how they want to run their business, sign an LLC Operating Agreement and start doing business.
In a limited liability company, the company is first responsible for its liabilities.
In the event the company does not have enough to cover its debts and liabilities, the members or partners will be personally liable to the extent of their participation.