Corporation vs. Incorporated

Attribute	Corporation	Incorporated
Legal Entity	Yes	Yes
Limited Liability	Yes	Yes
Ownership Structure	Shareholders	Shareholders
Formation Process	Corporation is formed by filing Articles of Incorporation	Incorporated is formed by filing Articles of Incorporation
Legal Status	Corporation is a legal entity separate from its owners	Incorporated is a legal entity separate from its owners

Definition

Corporation and Incorporated are both legal entities that are formed to conduct business activities. A corporation is a type of business structure that is owned by shareholders, who have limited liability for the company's debts and obligations. On the other hand, being incorporated means that a business has filed the necessary paperwork with the state to become a corporation.

Ownership

One key difference between a corporation and being incorporated is the ownership structure. In a corporation, ownership is divided into shares of stock, which are owned by shareholders. Shareholders have the right to vote on important company decisions and receive dividends from the company's profits. When a business is incorporated, it becomes a separate legal entity from its owners, who are not personally liable for the company's debts.

Liability

Another important distinction between a corporation and being incorporated is liability. In a corporation, shareholders have limited liability, which means that they are not personally responsible for the company's debts and obligations. This protection extends to their personal assets, such as their homes and savings. When a business is incorporated, it also provides limited liability to the owners, shielding them from personal liability for the company's debts.

Taxation

When it comes to taxation, there are differences between a corporation and being incorporated. A corporation is subject to double taxation, meaning that the company's profits are taxed at the corporate level and then again when they are distributed to shareholders as dividends. On the other hand, being incorporated allows a business to choose how it wants to be taxed. It can elect to be taxed as a corporation or as a pass-through entity, such as an S corporation or an LLC.

Regulation

Both corporations and incorporated businesses are subject to regulations and oversight by the state in which they are formed. Corporations must comply with specific requirements, such as holding annual meetings, keeping accurate records, and filing annual reports with the state. When a business is incorporated, it must also adhere to these regulations to maintain its status as a legal entity.

Flexibility

One advantage of being incorporated is the flexibility it offers in terms of ownership and management. A corporation can have multiple classes of stock, allowing for different voting rights and dividend preferences. It can also have a board of directors and officers who are responsible for running the company. When a business is incorporated, it can take advantage of these structures to tailor its ownership and management to its specific needs.

Costs

There are costs associated with both forming a corporation and being incorporated. When forming a corporation, there are fees to file the necessary paperwork with the state, as well as ongoing costs such as annual report fees and taxes. Being incorporated also incurs costs, such as legal fees to draft the necessary documents and fees to file with the state. It is important for businesses to consider these costs when deciding whether to form a corporation or become incorporated.

Conclusion

In conclusion, while there are similarities between a corporation and being incorporated, there are also key differences that businesses should consider. Both offer limited liability and separate legal status, but there are variations in ownership, taxation, regulation, flexibility, and costs. Understanding these distinctions can help businesses make informed decisions about which structure is best suited to their needs.