Legal Definitions - incorporation

Definition: Incorporation is the legal process of creating a corporation. This means that a group of people, called shareholders, file an application and some paperwork with the government to create a new business entity.

For example, let's say that three friends want to start a business selling handmade soap. They decide to incorporate their business, which means they have to file some paperwork with the government. This paperwork includes something called the Articles of Incorporation, which is a legal document that outlines the basic details of the new corporation, such as its name, address, and purpose.

Once the government approves the application and the Articles of Incorporation, the new corporation is officially created. This means that the business is now a separate legal entity from its owners, and it can do things like sign contracts, own property, and sue or be sued in court.