Business, Legal & Accounting Glossary
Incorporation (abbreviated Inc. in U.S. and Canadian business names) is the forming of a new corporation (a corporation being a legal entity that is effectively recognised as a person, albeit a fictitious one, under the law). The corporation may be a business, a non-profit organization, sports club or even a government of a new city or town. This article focuses on the process of incorporation; see also corporation.
The Articles of Incorporation (also called a Charter, Certificate of Incorporation or Letters Patent) are filed, listing the purpose of the corporation, its principal place of business and the number and type of shares of stock. A registration fee is due which will usually be between $25 and $1,000, depending on the state.
A corporate name is generally made up of 3 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 possibilities for this legal ending in the U.S.
Usually, there are also Corporate Bylaws which must be filed with the state. These will outline a number of important corporate housekeeping 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.
Corporations can only deduct net operating losses going back two years and forward 20 years.
Assuming your corporation has not sold stock to the public, conducting corporate business is remarkably straightforward and uncomplicated. Often it amounts to little more than recording key corporate decisions (for example, borrowing money or buying real estate) and holding an annual meeting. Even these formalities can often be done by written agreement and don’t usually necessitate a face-to-face meeting.
In the UK the process of Incorporation is generally called Company Formation and the details of the process are covered in that Article. The United Kingdom is one of the quickest locations to Incorporate, with a fully electronic process and a very fast turn around by the national registrar of companies Companies House. The current Companies House record is 5 minutes to vet and issue a Certificate of Incorporation for an electronic application.
There are many different types of UK company::
The legal concept of incorporation is recognized all over the world. In the United States, corporations are identified by the term “incorporated” added after the business name, such as “Texas Instruments, Incorporated”, or by putting the word “corporation” in the name of the company, as in “Netscape Communications Corporation”. In Germany, Austria and Switzerland the GmbH (“Gesellschaft mit beschränkter Haftung”, meaning “limited liability business association”), as well as the AG (“Aktiengesellschaft”, meaning “stock market traded business association”) are the most common comparable concepts. In the United Kingdom, the titles Ltd. (abbreviation for a limited company) or plc (abbreviation for a public limited company) are used for corporations. In France, Switzerland and Luxembourg the term “Sàrl” or “Société à responsibilité limitée” (“company with limited liability”) is used, while Spain, Portugal, Poland, Romania and South America use the title S.A. (Anonymous Partnership) for corporations. Denmark and Norway uses the title A/S for stock corporations (Danish: Aktieselskab, Norwegian: Aksjeselskap), while Sweden uses the similar AB (Swedish: aktiebolag). Finland uses OY (Finnish:Osakeyhtiö), OYj for stock corporations (Osakeyhtiö, julkinen) and KY (Kommandiittiyhtiö) for private enterprises. Italy uses “Srl”, or “Società a Responsabilità Limitata” (limited liability company) and “SpA” or “Società Per Azioni” (stock corporation). The Netherlands uses NV and BV. Singapore uses Pte. Ltd., meaning “private limited” which is the equivalent of a U.S. incorporated entity. Most commonly used title of a corporation in Latvia are “S.I.A.” (Latvian:Sabiedrība ar Ierobežotu Atbildību) for “Limited Liability Company”, or “LLC” ; and “A/S” (Latvian: Akciju Sabiedrība) for “Joint Stock Company”, or “JSC”. In Latvia titles “S.I.A.” or “A/S” are put before the name of the corporation. Albania uses “Sh.p.k” (Albanian: Shoqëri me Përgjegjësi të Kufizuar) for “Limited Liability Company”, and “Sh.a.” (Albanian: Shoqëri Anonime) meaning “Anonymous Partnership”, for stock corporations.
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This glossary post was last updated: 24th April, 2020 | 1 Views.