When a company incorporates, it becomes its own legal business structure set apart from the individuals who founded the business. Through incorporation, the company's owner or owners create a separate legal entity to transact business.

Why is a company incorporated?

Incorporation has many advantages for a business and its owners, including: Protects the owner's assets against the company's liabilities. Allows for easy transfer of ownership to another party. Often achieves a lower tax rate than on personal income.

What type of company is incorporated?

Incorporated means that a business has filed documents with a state to become a corporation. The term incorporated is used because, by filing the certificate of incorporation and going on record with the state, the owners become legally separate from their investment and the business itself.