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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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.


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


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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.


Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson


Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005
References in periodicals archive ?
During March 2017, of the 10,894 newly incorporated companies, PAN was allotted within 4 hours in 95.63 per cent cases and within one day in all cases.
The business, including Brand Addition Limited (together with its subsidiaries) and Kreyer Promotion Service GmbH, was purchased by H.I.G Milan UK Bidco Limited and B270 Vermogensverwaktung GmbH, both newly incorporated companies controlled by H.I.G.
In a bid to improve accountability and funding options, the Spanish government and the central bank have sought savings banks to spin off their banking operations into incorporated companies that could trade on the stock market, the report noted.
ISLAMABAD, July 16, 2010 (Balochistan Times): The Securities and Exchange Commission of Pakistan (SECP) registered 19 locally incorporated companies, having foreign investment during June 2010.

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