Inc vs Corp: Everything You Need to Know
The difference between Inc vs Corp is a topic that many entrepreneurs would like to learn more about.3 min read updated on January 01, 2024
Updated October 26, 2020:
The difference between Inc vs Corp is a topic that many entrepreneurs would like to learn more about. Inc. is the abbreviation for incorporation while Corp. is the abbreviation for corporation. Both abbreviations are used in the names of entities that have been incorporated.
Incorporation and Corporation: Overview
Either abbreviation can be used in the name you propose when you register your business.
There is no difference between Inc. or Corp. when it comes to tax structure, legal structure, limited liability, or compliance obligations. However, you cannot use both abbreviations at the same time. Also, you need to be consistent and only use one abbreviation or the other. In this sense, the two abbreviations are not interchangeable.
Once an entity is registered with Inc. or Corp. in its company name, it needs to use this extension for all of its legal paperwork.
- Both Inc. or Corp. refers to institutions that have been granted a charter, which recognizes the institution as a legal and separate entity. The entity has its own privileges and liabilities. These privileges and liabilities are distinct from that of its owners
- Limited liability is an important feature of both. This means that the employees, shareholders, and directors are not considered personally liable for any debts incurred by the institution.
- The company is "born" when the founders complete the incorporation process of the state. This is true whether the company is an Inc. or a Corp.
Differences Between Corp. and Inc.
A corporation is able to file lawsuits, face lawsuits, conduct business, and own property in its name. Businesses usually receive a few legal protections upon becoming a corporation. These legal protections are bestowed to the company owners. this makes it easier for a company to receive funding from many different sources.
Ownership interests are referred to as shares. These shares can be given, sold, and inherited. In principle, a corporation is able to outlive its owners and exist forever.
The liability of shareholders when it comes to business obligations is limited to how much they invest in the company. Shareholders do not risk personal assets unless a seller or lender asks for the personal assets to guarantee that debts are paid.
A board of directors is responsible for managing the corporation. These directors are selected by the corporation's shareholders.
The abbreviation for incorporated is Inc. A corporation, also referred to as an incorporated company, is a legal entity that is separate from the individual or individuals who formed it.
Directors and officers are able to purchase ownership interests or shares in the company. They also have responsibility for the operation of the company.
In the event of a lawsuit, incorporation reduces the liability of the individual.
Since a corporation is considered a legal entity, it is liable for its own taxes and debts. A corporation can sell stocks to make money and pay taxes on all earnings.
A corporation must be formed by following state law. In most states, it is necessary to file the articles of incorporation with the secretary of state.
Corporations are legally complex and are more costly to administer. As a result, the U.S. Small Business Administrations advises small businesses not to go through the process of incorporation until they become larger.
Incorporation refers to the process of forming a corporation.
The articles of incorporation must be filed with the corporations office of the state. The articles of incorporation are also referred to as the charter.
The birth certificate of the corporation needs to have the following:
- The corporation's name.
- A name needs that is completely distinctive from the names of all the other corporations in the state.
- A name that is not be misleading in any way.
- The address of the main office of the corporation.
- The life span of the corporation. The life span can be indefinite.
- A description of the corporation's anticipated activities and businesses.
The corporation is "born" once the charter is filed with the secretary of state. The only exception to this rule is if the articles state that the corporation should come into existence another day.
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