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Incorporation Definition (All You Need To Know)

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What Does Incorporation Mean

In business, the term incorporation is used to refer to the process of forming a new business entity.

In other words, when a person or company files the required paperwork to create or constitute a new business entity (such as a corporation), we refer to that process as “incorporation”.

For example, Mary has filed the necessary paperwork with the government in order to have a new company created for her.

In this context, Mary is undergoing an incorporation process.

This means that Mary is doing what’s necessary to officially create a new company so she can have her business operation under the company instead of her personal name.

Incorporation Process

The incorporation process typically works as follows:

  • You select a company name
  • Prepare the company’s articles of incorporation 
  • File the articles of incorporation with the state or government 
  • Appoint a registered agent
  • Prepare the company bylaws
  • Appoint the company directors
  • Issue your corporation stock
  • Obtain your company’s EIN 

Every jurisdiction will have its own unique requirements, so the incorporation process may differ from one place to another.

Operating An Incorporated Business

When a company is incorporated further to the successful completion of the incorporation process, then the business owner or company founder can do business under the company.

Doing business under the company consists of the company generating its revenues, acquiring its own assets and liabilities, paying its own expenses, and filing its own income tax returns.

By having a separate legal entity, corporations protect shareholders allowing them to benefit from limited personal liability.

In other words, a corporation is responsible for its own assets and liabilities where business creditors cannot personally pursue shareholders for the corporation’s debt or liability.

Incorporation Definition 

How do you define incorporation?

According to Investopedia, the definition for incorporation is as follows:

Incorporation is the way that a business is formally organized and officially brought into existence.
Author

This is a good and simple definition of the term incorporation.

The Merriam-Webster dictionary defines incorporation as:

Creation or formation of a legal corporation
Author

Essentially, incorporation means:

  • The process of
  • Forming
  • A new company 

Incorporation Legal Definition

In law, the term incorporation refers to the legal process of forming a new business entity by filing the necessary documents and paperwork with the relevant governmental authority or agency.

In fact, corporations are legal entities separate from the business owner or the shareholders.

For a corporation to be formed, a person must file the necessary documentation with the state or government and pay the applicable fees to initially create it.

In essence, when a new company is to be formed, a person will need to go through the incorporation process that is unique to the jurisdiction in which the company is being formed.

Every jurisdiction will have its own legal requirements to satisfy for the government to officially form a new business entity and recognize it as a separate legal entity.

Then, once a corporation is formed, the business entity must be kept “alive” by filing periodic paperwork and observing the ongoing maintenance requirements.

Define Incorporation Takeaways 

So there you have it folks!

What does incorporation mean?

In business, the term incorporation is used to refer to the process of forming a new company by filing the required paperwork with the relevant government agency and paying the associated fees.

In law, incorporation refers to the legal process where a business entity is formed and recognized as an entity under the law.

For business owners and entrepreneurs, there are many benefits in incorporating a company to do business.

Particularly, through the incorporation process, you can create a new business entity that is separate and apart from you giving you limited liability protection.

In other words, the business owner or shareholders will not be personally held liable for the company’s liabilities and financial obligations (with exceptions of course).

This is called limited liability protection.
Now that you know what is the meaning of incorporation, good luck in getting a new company formed!

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Now, let’s look at a summary of our findings.

Understanding The Incorporation Definition

  • “Incorporation” is a term used in business to refer to the process someone has to follow to create a new business entity such as a corporation 
  • The incorporation of a company typically consists of filing the corporation’s articles of incorporation, along with any other paperwork required by the state, along with applicable fees
  • When the incorporation process is successfully completed, the state confirms the creation of a new business entity authorized to do business as a separate legal entity 
Corporation accounting 
Date of incorporation 
Define INC
Direct incorporation 
EIN
Incorporate definition 
Incorporated definition 
Incorporating a business 
Incorporating definition 
Incorporation examples 
Incorporation guide
Incorporation papers
Incorporation vs corporation 
Is INC a corporation 
Jurisdiction of incorporation 
Limited liability protection 
Operating agreement 
Process of incorporation 
State of incorporation 
Stock certificate 
Tax ID Number
Total incorporation
Author
Articles of incorporation definition 
C Corp vs S Corp
Closed corporation 
Disclaimer definition
Dividend payment 
Incorporation by reference
Incorporation clause
Indemnification clause
Indemnification definition
Indemnity definition
Liability cap clause
Limited liability company 
Limited liability partnership 
Limited liability protection
Limited partnership 
LLC vs INC
LP vs LLP
Partnership distribution
Partnership 
Partnership vs corporation 
Private company
Public company
Unlimited liability 
What is an INC
Author

Editorial Staff
Hello Nation! I'm a lawyer by trade and an entrepreneur by spirit. I specialize in law, business, marketing, and technology (and love it!). I'm an expert SEO and content marketer where I deeply enjoy writing content in highly competitive fields. On this blog, I share my experiences, knowledge, and provide you with golden nuggets of useful information. Enjoy!

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