Incorporation
A legal process through which a company receives a charter and the state in which it is based allows it to operate as a corporation.
Incorporation
The process by which a business becomes a legal entity separate from its
owner(s). Incorporation presents a number of advantages: becoming a separate legal entity means that the business itself makes or loses
money, which protects owners from
liability for its
debts. Likewise, a
corporation is taxed on its
earnings separately from its owners, and, in many countries, the corporate
tax rates are lower than personal tax rates. The process of incorporation involves writing
articles of incorporation and registering them with the appropriate government entity in order to receive a corporate
charter, which confers corporate legal status.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
Incorporation.
When a business incorporates, it receives a state or federal charter to operate as a corporation. A corporation has a separate and distinct legal and tax identity from its owners.
In fact, in legal terms, a corporation is considered an individual -- it can own property, earn income, pay taxes, incur liabilities, and be sued.
Incorporating can offer many advantages to a business, among them limiting the liability of the company's owners. This means that shareholders are not personally responsible for the company's debts. Another advantage is the ability to issue shares of stock and sell bonds, both ways to raise additional capital.
You know that a business is a corporation if it includes the word "Incorporated" -- or the short form, "Inc." -- in its official name.
incorporation
see COMPANY FORMATION.Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson
incorporation
see COMPANY FORMATION.Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005