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Incorporation establishes a new legal entity, providing protection of personal assets and durability. The process varies by region but generally involves establishing a name, creating bylaws, and submitting an application with fees. The UK process is quick and electronic, while India’s is paper-based and complex. New companies must also register with tax authorities.
The incorporation process establishes a corporation, non-profit or club into a new recognized legal entity regardless of its owners. The concept of incorporation is internationally recognized, although the incorporation process varies regionally. Despite the variations, the incorporation process usually involves establishing a name, writing the bylaws or articles of the organization, and submitting the application with the accompanying fee to the proper authorities.
Internationally, the benefits of incorporation are similar. By forming a new organization, the original owners generally receive protection of their personal assets. By becoming its own person under the law, a corporation can exist beyond its original owners, giving it durability. The income potential also changes, as many forms of incorporation allow for the sale of shares and have alternative tax methods.
The documents required for the incorporation process vary by region, but most require verification of an approved company name, Articles of Association, and appropriate filing fees. Countries have various means of approving company names. In the United States, for example, company names generally have three distinct parts, a distinguishing element, a descriptive element, and a legal ending. In most situations around the world, the naming process includes verifying that the new company name does not already belong to an existing company.
Articles of Association, or some form of corporate bylaws, are generally required for the incorporation process worldwide. This document outlines the articles of association, the purpose of the company, and information regarding voting and shareholder meetings. This document is often considered a legal document and the company may be legally bound by its contents, so the advice of an incorporated attorney is often sought at this stage.
The incorporation process in the UK, for example, can be completed in a matter of hours, while processes in other countries can be very complex and time consuming. Requirements for filing to include include the Articles of Association, Memorandum of Association and Form IN01, which provide the location of the registered office and ensure compliance with the law. In the UK it is possible to integrate electronically, significantly speeding up this process.
Incorporating a company in India requires many steps and is paper-based, making it likely to be a much longer process than in the UK. The bylaws and a memorandum of the association must then be created and stamped. These documents are then sent with power of attorney, additional verification and supplementary documents.
Since tax rules are often different at the time of incorporation, new companies must be registered with government tax authorities. Accountants or tax specialists can help new companies restructure their accounting system to meet the new requirements. In addition to calculating taxes, this setup may allow for income expansion due to stock sales.
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