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What is the Incorporation Process?

By Jess Rhodes
Updated May 16, 2024
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The incorporation process forms a business, non-profit, or club into a new legal entity that is recognized independently of its owners. The concept of incorporation is internationally recognized, although the incorporation process varies regionally. Despite variations, the process for incorporation usually involves establishing a name, writing the organization's bylaws or articles, and filing the application with the accompanying fee to the appropriate authorities.

Internationally, the benefits of incorporation are similar. By forming a new organization, the original owners generally receive protection of their personal assets. By becoming its own person under the law, a corporation can exist beyond its original owners, giving it durability. Income potential also changes, as many forms of incorporation allow for the sale of stock and have alternate taxation methods.

Documents needed for the incorporation process vary by region, but most require verification of an approved corporation name, the Articles of Incorporation, and the appropriate filing fees. Countries have various means for approving corporation names. In the U.S., for example, corporation names generally have three distinct parts, a distinctive element, a descriptive element, and a legal ending. In most situations worldwide, the naming process includes verification that the name of the new company does not already belong to an existing company.

The Articles of Incorporation, or some form of corporation charter, is generally required for the incorporation process worldwide. This document outlines bylaws, the purpose of the corporation, and information about shareholder voting and meetings. This document is often considered a legal document, and the corporation can be legally held to its contents, so the advice of an incorporation lawyer is often sought out at this stage.

The incorporation process in the U.K., for example, can be completed in a matter of hours, while processes in other countries can be very complex and time consuming. Filing requirements to incorporate include the Articles of Association, the Memorandum of Association, and the Form IN01, providing the location of the registered office and ensuring compliance with the law. In the U.K., incorporating electronically is possible, speeding this process up significantly.

Incorporating a business in India requires many steps and is submitted in hard copy, making it an arguably much longer process than in the U.K. The corporation name must first be approved by the Registrar of Companies in the state where the business’ headquarters will operate. Articles of Association and a Memorandum of Association must then be created and stamped. These documents are then be submitted with a power of attorney, additional verification, and supplemental documents.

Since tax rules are often different upon incorporation, new corporations need to be registered with governmental tax authorities. Accountants or tax specialists can help new corporations restructure their accounting system to meet the new requirements. In addition to calculating taxes, this setup can allow for an expansion of income due to stock sales.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.

Discussion Comments

By Melonlity — On Dec 01, 2014

@Vincenzo -- You still need a good accountant and/or attorney to help you set up everything. Should you form an "S" corporation or a "C" corp? What's the difference?

When your corporation is filed, what do you need to do in terms of board meetings and filings with the state to keep the form functioning and legit? What about corporate taxes?

Those are questions that you need professional help to answer.

By Vincenzo — On Nov 30, 2014

In the United States, the taxation part of both filing and then running the corporation was the hardest part. That has all gotten easier, however, thanks to the ability to register corporations on the Internet quickly and accounting packages that calculate payroll taxes for you.

That is all good stuff. A lot of people might have a good idea but don't know how to run a business. The taxation part of a business is the one that can get you in trouble in a hurry, so online resources and good accounting packages make things simpler.

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