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