Definition - What does Incorporation mean?

Incorporation in defined as a legal act or process that incorporates a business (the formation of a corporation). Incorporation may include the formation of a:

  • Company
  • Business
  • Firm
  • Organization (both commercial and non-commercial types)
  • Union
  • Sports club
  • NPO

It is usually after incorporation that a business is considered as a separate entity.

Justipedia explains Incorporation

There are some legal requirements that must be met for any business or organization to be incorporated, but incorporation laws are different in each state. The process is a complex one and has a number of stages, like electing officers, creating the articles, issuing stocks, etc.

For a business to be incorporated, it is important that it has a unique name, which should also contain the word “corporation” (or an abbreviation of the word (“Inc.”)) in it, along with the business purpose. A set of bylaws should also be adopted, in addition to performing any other tasks as required by state law. Finally, a business is said to be incorporated after filing “articles of incorporation."

An incorporated business has a legal obligation to act and work in the best possible financial interest of its shareholders. This legal responsibility of a corporation toward its shareholders is called fiduciary duty.

There are many forms of corporation, including limited liability corporation (LLC).

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