Incorporation Definition and Legal Meaning

On this page, you'll find the legal definition and meaning of Incorporation, written in plain English, along with examples of how it is used.

What is Incorporation?

the act of formally creating an organisation fullfilling the necessary legal requirements and formalities.

History and Meaning of Incorporation

Incorporation refers to the process of creating a corporation, a legal entity that is distinct from its owners. An incorporation can be created for either profit or nonprofit purposes. The process typically involves filing articles of incorporation with the state government where the corporation will be headquartered.

The idea of incorporation has been around for centuries and was first used in the United States during the late 18th century. The concept was derived from English common law, which recognized corporations as legal entities separate from their owners. Today, corporations are an essential part of the modern business landscape and are used by businesses of all sizes.

Examples of Incorporation

Here are a few examples of how the term incorporation might be used in different contexts:

  1. A group of entrepreneurs decides to start a new tech company and files articles of incorporation to create a new corporation.
  2. A nonprofit organization seeks to obtain tax-exempt status and decides to incorporate to formalize its structure.
  3. A small business owner decides to incorporate their business to protect their personal assets from potential lawsuits.

Legal Terms Similar to Incorporation

Here are some related legal terms that are similar to incorporation:

  1. Limited liability: Refers to the legal protection provided to owners of corporations and other types of limited liability entities from being personally liable for the debts and obligations of the entity.
  2. LLC formation: LLC stands for Limited Liability Company, and LLC formation refers to the process of creating an LLC.
  3. Corporate governance: Refers to the system of rules, practices, and processes by which a corporation is directed and controlled.