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Difference Between Corporation and Incorporation

corporation vs incorporation

Corporation and incorporation are two very closely related words. A Corporation, as is generally known, is a body formed for the purpose of carrying out a business of any kind. One can come across business corporations, charity corporations, educational corporations and a host of other types of corporations. So if this is so, then what is incorporation? It is a process by which a corporation is formed. Incorporation is the legal process of setting up a corporation.

When using incorporation as a noun, it can mean a business organisation’s corporate status. The term Corporation should be used when talking of business institutions or organisations or groups. The term incorporation should be used only when referring to the legal steps taken to form the corporation. Though corporations in different countries will have almost the same features and aims, the process of incorporation differs from one country to another as per the jurisdiction of that region.

Incorporation safeguards the interests of the personal assets against lawsuits. It also deals with several other legal issues such as transferable ownership, taxation, retirement funds, raising funds, credit rating and durability. Corporate governance, internal affairs, limited liability and piercing the corporate veil are doctrines related to incorporation.

As a whole, incorporation and corporation cannot be differentiated as one leads to the other. While incorporation is the process, corporation is the organisation formed out of the process. Without incorporation, there is no corporation. When one process is responsible for the formation of another, how can one say that they have differences?

Summary

  1. Incorporation and corporation cannot be differentiated as one leads to the other.
  2. While incorporation is the process, corporation is the organisation formed out of this process.
  3. Corporation, as is generally known, is a body formed for the purpose of carrying out a business of any kind.
  4. The term Corporation should be used when talking of business institutions or organisations or groups. The term incorporation should be used only when referring to the legal steps taken to form the corporation.
  5. Though corporations in different countries will have almost the same features and aims, the process of incorporation differs from one country to another as per the jurisdiction of that region.
  6. Incorporation safeguards the interests of the personal assets against lawsuits. It also deals with several other legal issues such as transferable ownership, taxation, retirement funds, raising funds, credit rating and durability.

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3 Comments

  1. Hello,

    I am in the beginning stages of starting a nonprofit organization. I am about to file for a 501c3 status; however, I feel like I need to decide if I want my business to be a corporation, incorporation, or llc. Like I said, my business has really not yet begun, but I wanted to file for a 501c3 so that I could start receiving grants. What should I do?
    Thanks,
    Tyler

  2. It was really helpful article .
    Thanks so much

  3. Thank you for enlightening me of the difference. I am about to start a business, should I use an incorporation or corporation? Please guide me the best I should do. Thank you.

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