The process of legally declaring a corporate entity as separate from its owners. Incorporation has many advantages for a business and its owners, including:

1) Protects the owner's assets against the company's liabilities
2) Allows for easy transfer of ownership to another party
3) Achieves a lower tax rate than on personal income
4) Receives more lenient tax restrictions on loss carry forwards
5) Can raise capital through the sale of stock

Incorporation involves drafting an "Articles of Incorporation", which lists the primary purpose of the business and its location, along with the number of shares and class of stock being issued, if any. Incorporation will also involve state-specific registration information and fees.

Incorporation creates a protective bubble around a company's owners, shareholders and directors. Incorporated businesses can take the risks that make growth possible without exposing the shareholders, owners and directors to personal financial liability outside of their original investments in the company.

In the United States, incorporated businesses have legal endings such as Inc., Ltd. or Corp. The same general process is used around the world, although legal endings vary by nation.

Investment dictionary. . 2012.


Look at other dictionaries:

  • incorporation — [ ɛ̃kɔrpɔrasjɔ̃ ] n. f. • déb. XVe relig.; lat. incorporatio 1 ♦ Action de faire entrer (une matière) dans une autre. ⇒ amalgame, mélange, mixtion. Incorporation de jaunes d œufs dans du sucre. Incorporation d un excipient dans un médicament. 2 ♦ …   Encyclopédie Universelle

  • incorporation — I (blend) noun aggregation, amalgamation, assimilation, centralization, coalescence, combination, commixation, compound, consolidation, fusion, infusion, interfusion, interlacement, intermixture, minglement, mixture, unification, union associated …   Law dictionary

  • Incorporation — is: * Incorporation (business), the creation of a corporation * Municipal corporation, a legal definition for a local governing body * Incorporation (Bill of Rights), law, is the process by which the United States Bill of Rights was applied to… …   Wikipedia

  • Incorporation — In*cor po*ra tion, n. [L. incorporatio: cf. F. incorporation.] [1913 Webster] 1. The act of incorporating, or the state of being incorporated. [1913 Webster] 2. The union of different ingredients in one mass; mixture; combination; synthesis.… …   The Collaborative International Dictionary of English

  • Incorporation — Incorporation[1] es el término legal con que se designa en inglés la formación de una corporación como persona jurídica legalmente constituida. La corporación puede ser una empresa con fines de lucro, una organización o fundación sin fines de… …   Wikipedia Español

  • incorporation — Incorporation. s. f. v. Union en un corps. Il se dit des drogues & des corps politiques. L incorporation de ces drogues est malaisée. l incorporation d une terre au Domaine. Il est peu en usage …   Dictionnaire de l'Académie française

  • incorporation — (n.) late 14c., incorporacioun, act or process of combining of substances; absorption of light or moisture, from O.Fr. incorporacion or directly from L.L. incorporationem (nom. incorporatio), noun of action from pp. stem of incorporare (see… …   Etymology dictionary

  • incorporation — incorporation. См. инкорпорация. (Источник: «Англо русский толковый словарь генетических терминов». Арефьев В.А., Лисовенко Л.А., Москва: Изд во ВНИРО, 1995 г.) …   Молекулярная биология и генетика. Толковый словарь.

  • Incorporation — (v. lat.), 1) Einleibung, Einkörperung, Menschwerdung Christi, s.u. Christus II. A); 2) Einverleibung in etwas; 3) Aufnahme in einen gesellschaftlichen Körper; 4) die Einverleibung einer Kirchenpfründe in Betreff der Seelsorge u. der Einkünfte in …   Pierer's Universal-Lexikon

  • incorporation — (in kor po ra sion ; en vers, de six syllabes) s. f. 1°   Action d incorporer, de faire entrer un corps dans un autre.    Terme de pharmacie. L action de faire entrer par mixtion un ou plusieurs médicaments dans un excipient mou ou liquide, pour… …   Dictionnaire de la Langue Française d'Émile Littré

  • Incorporation — Cette page d’homonymie répertorie les différents sujets et articles partageant un même nom. Pour « Incorporated place », voir Place (United States Census Bureau) …   Wikipédia en Français

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