Definition of Inc can be defined generally as a legal structure used to specify or establish a business. This legal structure is useful in terms of determining the type of business, financial aspect such as liabilities and taxes issues, and particularly to determine the owners or numbers of investors allowed. Inc itself is abbreviated from Incorporation or Incorporated. Once people establish their own company, usually the abbreviation is used after their business’s name to simplify the future business matters. Therefore, the definition of Inc company is basically a company which already has a legal structure in form of incorporation.
Definition of Inc Company Legal Structure
If you’re already familiar with the basic definition of Inc, we can move on to a more technical stuff related to how incorporation works. When a company starts using the term Inc or Incorporated, it means that the business is already legally approved as an independent entity and it is recognized as one person. Thus, the company now is independent from the people who form it, which also makes it now responsible of all its assets and liability it owned. This condition allows a company to limit the member liability if in the future the thing that involves lawsuit happens.
Definition of Inc company as a legally recognized entity allows it to still be able to run even though the director has passed away, through a stock sale, or the member has debts. Because of its formal establishment, the incorporation of a company should pass and affirm with state law. Technically, for a company to register, it only needs to send an application to state’s secretary and complete requirements needed to be formally incorporated. However, it is recommended that only already settled and huge company to file an incorporation request since the administration cost can be pretty complex and expensive.
Other definition of Inc or definition of Inc company can be seen from the advantages it has compared to other form of business legal structure. The main legal benefits would be that the mechanism offered in incorporation allows the safeguarding of individual’s assets from other people’s claims. Therefore, the directors and stockholders are not responsible with any of company’s obligations and debts. The amount of money they are liable to is limited only to the amount of money it purchased. The ownership transfer of one company is also relatively easy to be done, so no wonder many people choose to register their company as incorporation and not any other legal structure.
In the end, every legal structure has its own advantages and disadvantages. Nevertheless, when it comes to business, people tend to pick the one that’s proved to be more profitable. Other than being able to safeguard individual’s asset, incorporated business will be able to reduce the price of tax that needs to be paid. It also allows you to sell shares of the company if you need to raise fund. In other words, many businessmen prefer to register their company as a corporation. Mentioned above are only the couple definition of Inc, but if you need a further information on how to transform the company into a corporation, you should check your state law for more comprehensive information.