Professional Documents
Culture Documents
Incorporation is the legal process used to form a corporate entity or company. A corporation is
the resulting legal entity that separates the firm's assets and income from its owners and
investors.
Corporations can be created in nearly all countries in the world and are usually identified as
such by the use of terms such as "Inc." or "Limited (Ltd.)" in their names. It is the process of
legally declaring a corporate entity as separate from its owners.
KEY TAKEAWAYS
Incorporation is the way that a business is formally organized and officially brought into
existence.
The process of incorporation involves writing up a document known as the articles of
incorporation and enumerating the firm's shareholders.
In a corporation, the assets and cash flows of the business entity are kept separate from
those of the owners and investors, which is called limited liability.
0 seconds of 1 minute, 21 secondsVolume 75%
Throughout the world, corporations are the most widely used legal vehicle for operating
a business. While the legal details of a corporation's formation and organization differ
from jurisdiction to jurisdiction, most have certain elements in common.
The directors of the company are responsible for day-to-day activities. They owe a duty
of care to the company and must act in its best interest. They are usually elected
annually. Smaller companies can have a single director, while larger ones often have a
board comprised of a dozen or more directors. Except in cases of fraud or specific tax
statutes, the directors do not have personal liability for the company's debts.