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Home > Business > Structure > Corporation and Incorporation Compared

Difference Between Corporation and Incorporation

Corporation vs Incorporation

Incorporation is the forming of a new corporation. A corporation on the other hand is a formal business association with a publicly registered charter recognizing it as a separate legal entity.

The corporation may be a non-profit organization, a business, sports club, or a government of a new city or town. It is interesting to note that there are various forms of corporation. Corporations are in fact the products of corporate law. It is more concerned about the interests of the management and shareholders. It takes care of the interests of the employees too who contribute work hard for its growth.

The incorporation on the other hand has the main function of safeguarding of personal assets against claims of lawsuits. One of the major differences between corporation and incorporation is the fact that in corporation stockholders, directors and officers are not liable for the debts incurred by the company and obligations.

In incorporation on the other hand proprietors are jointly responsible for all the liabilities of business such as loans and legal judgments. Another important difference between corporation and incorporation is that a creditor of a shareholder of a corporation cannot seize the assets of a business firm.

Incorporation on the other hand is characterized by several legal benefits. Some of the legal benefits include protection of personal assets, transferable ownership, retirement funds, taxation, raising funds through sale of stock, durability and credit rating.

The doctrines of incorporation include corporate governance, limited liability, internal affairs doctrine and piercing the corporate veil. The doctrines of corporation include Rochdale principles in addition to other doctrines of incorporation.

As far as taxation is concerned corporations can only deduct net operating losses going back two years and going forward 20 years. In the U.K. the process of incorporation is often called company formation.


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