Devoted to Corporate Attorneys, Corporate Lawyers, and Corporate Counsel

The following is not meant to be legal advice.

Incorporation is the process of creating a legal entity under authority granted by a state or the District of Columbia. Many entities seek incorporation in Delaware because of the speed in getting through the process, and the favorable laws towards corporate entities in Delaware.

A corporation is a separate legal entity, with existence independent of its officers, directors, stockholders, or members. This means there is limited liability against the officers, directors, stockholders, members for business torts unlike the possible liability for owners and management in other business organizations such as partnerships and sole proprietorships.

Organizations sometimes begin as limited liability companies, and as they grow, are incorporated.  When entities incorporate, they issue stock to stockholders, and the entities are taxable separately from the owners and management on net income.

A nonprofit organization can be granted an exemption from federal income tax by the Internal Revenue Service, but such tax-exempt status is not required for all nonprofit organizations.