Incorporation (business)

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Incorporation (Inc.) is the forming of a new corporation (a corporation being a legal entity that is effectively recognized as a person under the law). The corporation may be a business, a non-profit organization, sports club, or a government of a new city or town. This article focuses on the process of incorporation; see also corporation.

In the United States[edit]

Legal benefits[edit]

Steps required for incorporation[edit]

The articles of incorporation (also called a charter, certificate of incorporation or letters patent) are filed with the appropriate state office, listing the purpose of the corporation, its principal place of business and the number and type of shares of stock.[1] A registration fee is due, which is usually between $25 and $1,000, depending on the state.

A corporate name is generally made up of three parts: "distinctive element", "descriptive element", and a legal ending. All corporations must have a distinctive element, and in most filing jurisdictions, a legal ending to their names. Some corporations choose not to have a descriptive element. In the name "Tiger Computers, Inc.", the word "Tiger" is the distinctive element; the word "Computers" is the descriptive element; and the "Inc." is the legal ending. The legal ending indicates that it is in fact a legal corporation and not just a business registration or partnership. Incorporated, limited, and corporation, or their respective abbreviations (Inc., Ltd., Corp.) are the possible legal endings in the U.S.

Usually, there are also corporate bylaws which must be filed with the state. Bylaws outline a number of important administrative details such as when annual shareholder meetings will be held, who can vote and the manner in which shareholders will be notified if there is need for an additional "special" meeting.

Taxation[edit]

Corporations can only deduct net operating losses going back two years and forward 20 years.

Reporting after incorporation[edit]

Assuming a corporation has not sold stock to the public, conducting corporate business is straightforward. Often, it amounts to recording key corporate decisions (for example, borrowing money or buying real estate) and holding an annual meeting. These formalities can often be supplanted by written agreement and do not usually need a face-to-face meeting.

In the United Kingdom[edit]

In the U.K., the process of incorporation is generally called company formation. The United Kingdom is one of the quickest locations to incorporate, with a fully electronic process and a very fast turnaround by the national registrar of companies, the Companies House. The current Companies House record is five minutes to vet and issue a certificate of incorporation for an electronic application.[citation needed]

Types of companies[edit]

There are many different types of UK companies:

International perspective[edit]

The legal concept of incorporation is recognized all over the world.

Sole proprietorship (person fizik) - A business owned and managed by one individual who is personally liable for all business debts and obligations.
Limited liability company (LLC) - A hybrid legal structure that provides the limited liability features of a corporation and the tax efficiencies and operational flexibility of a partnership.
Corporation - A legal entity owned by shareholders.
Non-profit - An organization engaged in activities of public or private interest where making a profit is not a primary mission. Some non-profits are exempt from federal taxes.

See also[edit]

References[edit]

  1. ^ Interactive map of U.S. state corporation departments, LawServer
  2. ^ companies.com.my/
  3. ^ "Singapore Private Limited Company Guide". Rikvin.com. Retrieved 2013-11-25. 
  4. ^ "Details on Private Limited Company". Businessdictionary.com. Retrieved 2013-11-25. 

External links[edit]