When incorporating your business, there are certain key terms to be aware of. Knowing these key terms can aid in the understanding of the incorporation process. Some important incorporation terms to know are:
Articles of Incorporation: A document detailing the name, purpose of the corporation, primary place of business, names of directors, and the amounts and types of stock it can issue. Articles of Incorporation must be filed with the proper state authorities.
Articles of Organization: Documents that must be filed by LLCs (very similar to the Articles of Incorporation).
Contract: An agreement involving two or more parties that creates a duty to do or not do something and a right to performance of the other's duty or a remedy for the breach of the other's duty.
Copyright: The legal right granted to an author, composer, playwright, publisher, or distributor to exclusive publication, production, sale, or distribution of their literary, musical, dramatic, or artistic work.
C corporation (C-Corp): A corporation with publicly traded shares that are held by the shareholders.
Directors: Individuals who make major policy decisions. Directors are elected by shareholders.
Foreign Corporation: A corporation that conducts business in a jurisdiction other than where it was formed.
General Partnership: A partnership in which each partner is liable for all debts and obligations, regardless of the individual’s capital contribution.
Incorporation: A separate legal entity to conduct business with rules that assist in the interests of the shareholders that invest their capital and the employees that contribute their time and labor.
Intellectual Property: An intellectual creation that is copyrighted and has commercial value, such as literary or artistic works, patents, appellations of origin, business methods and industrial processes.
Joint Venture: A partnership or business agreement between two or more individuals that is limited to a single enterprise and involves the sharing of resources, profits, losses and control.
Limited Liability Partnership: Partnership in which the liability of all partners is limited. Partners are not typically responsible for obligations, debts, or liabilities of the partnership resulting from actions of the other partner, agent, or employee of the partnership.
Limited Partnership: A partnership involving business management by one or more general partners, in which capital is provided by limited partners who do not participate in management, but share profits and their liability are limited to their respective capital contributions.
Non-Disclosure Agreement: A contract stating that information will be kept confidential and will not be given out without proper authorization.
Non-profit Corporation: A corporation, not designed for profit-making purposes that benefits members of an organization for a public purpose. All profits must be used to benefit the organization.
Partnership: A business owned by two or more people who are personally liable for all debts and obligations.
S Corporation (S-Corp): A corporation that has a limited number of shareholders that is treated as a partnership for tax purposes.
Sole Proprietorship: A business legal entity that is owned and operated by one person who is held personally liable for all business debts and obligations. The owner and the business are considered one entity and profits are reported on the owner’s personal tax return.
Trademark: An officially registered name, symbol, or other device identifying a product that is legally restricted to the use of the owner or manufacturer.
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