Incorporation in the United States:

Legal benefits:

* Protection of personal assets against the claims of creditors and lawsuits. Sole proprietors and general partners in a partnership are personally and jointly responsible for all the liabilities of a business such as loans, accounts payable and legal judgments. In a corporation, however, stockholders, directors and officers typically are not liable for their incorporating company debts and obligations. They are limited in liability to the amount they have invested in the corporation (e.g. If $100 in stock was purchased, no more than $100 can be lost). Corporations and Limited Liability Companies (LLCs) may also hold personal assets like houses, cars or boats. If one is personally involved in a lawsuit or bankruptcy, these assets may be protected. A creditor, owner of a corporation or LLC, cannot seize the assets of the company; however, they can seize their ownership shares in the corporation, as that is considered a personal asset.

* Transferable ownership. Ownership in a corporation or LLC is easily transferable to others, either in whole or in part. Some states' laws are particularly attractive to this end. For example, with a Delaware Corporation, the transfer of ownership in a corporation is not required to be filed or recorded.

* Retirement funds. And qualified retirement plans (like 401ks) may be set up more easily with a corporation, which can also fully deduct the cost of paying its owner's health insurance.

* Taxation: In United States, incorporating company are taxed at a lower rate than individuals. Also, they can own shares in other corporations and receive corporate dividends 80% tax-free. There are no limits on the amount of losses a corporation may carry forward to subsequent tax years. A sole proprietorship, on the other hand, cannot claim a capital loss greater than $3,000 unless the owner has offsetting capital gains.

* Raising funds through sale of stock: Capital from investors can be raised for corporations easily through the sale of stock.

* Durability: A corporation is capable of continuing indefinitely. Its existence is not affected by the death of shareholders, directors, or officers of the corporation.

* Credit rating: Regardless of an owner's personal credit scores, corporations acquire their own credit rating, and build a separate credit history by applying for and using corporate credit.

Steps for incorporation:

* The filing of the Articles of Incorporation (also called a Charter, Certificate of Incorporation or Letters Patent). The first step is to check with your state's corporate filing office (usually either the Secretary of State

or Corporations Commissioner) and federal and state trademark registers to be sure the name you want to use is available. You then fill out a preprinted form (available from commercial publishers or your state's corporate filing office) listing the purpose of your corporation, its principal place of business and the number and type of shares of stock. You'll file these documents with the appropriate office, along with a registration fee which will usually be between $200 and $1,000, depending on the state.

How to Select a Corporation's Name

A corporate name is generally made up of 3 parts i.e.: *Distinctive element, is the first part, "Descriptive element*, is the second part and *legal ending" is the third in corporate naming. All corporations must have a distinctive element and a legal ending to their names. Some corporations choose not to have a descriptive element. In the name "Zippo Computers Inc." the word "Zippo" is the distinctive element; the word "Computers" is the descriptive element; and the "Inc." is the legal ending. The legal ending indicates that it is in fact a legal corporation and not just a business registration or partnership. You can choose from the following words: Incorporated, Limited and Corporation, or their respective abbreviations: Inc., Ltd. and Corp.

* You'll also need to complete (but not file) Corporate Bylaws. These will outline a number of important corporate housekeeping details such as when annual shareholder meetings will be held, incorporating company who can vote and the manner in which shareholders will be notified if there is need for an additional "special" meeting.

Articles of Incorporation:

The Articles of Incorporation (sometimes also referred to as the Certificate of Incorporation or the Charter) are the primary rules governing the management of a corporation, and are filed with a state or other regulatory agency.

A corporation's Articles of Incorporation generally provide information such as:

* The corporation's name. Certain words such as "incorporated", "limited", "corporation" or their abbreviations are usually required as part of the name as a "flag" to indicate to persons doing business with the organization that it is a corporation (with limited liability) as opposed to an individual (with unlimited liability). In some cases, certain types of names are prohibited except by special permission, such as words implying the corporation is a government agency or has powers to act in ways it is not otherwise allowed.

* The name of the person(s) organizing the corporation (the Incorporator).

* Whether the corporation is a stock corporation or a non-stock corporation.

* Whether the corporation's existence is permanent or for a specific period of time.

* In some cases, a corporation must state the purposes for which it is formed. Some jurisdictions permit a general statement such as "any lawful purpose" but some require explicit specifications.

* If a non-stock corporation, whether it is for profit or non-profit. However, some jurisdictions differentiate by "for profit" or "non profit" and some by "stock or non-stock".

* If a stock corporation, the number of shares the corporation is authorized to issue, or the maximum amount in a specific currency of stock that may be issued, e.g. a maximum of $25,000.

* The number and names of the corporation's initial Board of Directors (though this is optional in most cases).

* The location of the corporation's "registered office" - the location at which legal papers can be served to the corporation if necessary. Some states further require the designation of a Registered Agent: a person to whom such papers could be delivered.

Most states permit a corporation to be formed by one person; in some cases (such as non-profit corporations) it may require three or five or more.

Articles of Incorporation vary widely from corporation to corporation, and from jurisdiction to jurisdiction, but generally do not go into great detail about a corporation's operations, which are spelled out in more detail in a company's By-Laws

A bylaw (sometimes also spelt by-law or byelaw) was originally the Viking town law in the Dane law. Contrary to popular etymology the element by has nothing to do with the preposition by. It is the Old Norse word for larger settlement as in Whitby and Derby (compare with modern the Danish-Norwegian word "by" meaning city, as in the expression "Storebyn" (Copenhagen), or the modern Swedish word "by", meaning village).

Corporate bylaws:

In modern days, a bylaw is a rule governing the internal management of an organization, such as a business corporation. Bylaws cannot countermand governmental law.

In a business situation, bylaws are drafted by a corporation's founders or directors under the authority of its Charter or Articles of Incorporation. Bylaws widely vary from organization to organization, but generally cover topics such as how directors are elected, how meetings of directors (and in the case of a business, shareholders) are conducted, and what officers the organization will have and a description of their duties.

Bylaws generally can be amended by an organization's Board of Directors.

In parliamentary procedure, particularly Robert's Rules of Order, the bylaws are generally the supreme governing document of an organization, superseded only by the charter of an incorporating company society. The bylaws contain the most fundamental principles and rules regarding the nature of the organization. It was once common practice for organizations to have two separate governing documents, a constitution and bylaws, but this has fallen out of favor because of the ease of use, increased clarity, and reduced chance of conflict inherent in a single, unified document. This single document, while properly referred to as the bylaws, is often referred to as a constitution or a constitution and bylaws. Unless otherwise provided by law, the organization does not formally exist until bylaws have been adopted.