Incorporation Terminology

There are a few key terms you should know when incorporating your business:

Articles of Incorporation: A document that is filed with the proper state authorities and explains the purpose of the corporation, name, primary place of business, names of directors, and the amounts and types of stock it can issue.

Articles of Organization: LLCs must file these documents; these articles are very similar to the Articles of Incorporation.

Contract: An agreement between 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:  A C-corporation, or C-corp., is a corporation whose shares are held by the shareholders and may be publicly traded.

Directors: Individuals who are elected by shareholders who make major policy decisions.

Foreign corporation: A corporation that conducts business in an area where it was not formed.

General partnership: A partnership where each partner is liable for all debts and obligations, regardless of the individual’s capital contribution.

Incorporation: A separate legal entity to conduct business. Their rules assist in the interests of the shareholders that invest their capital and the employees that contribute their time and labor.

Intellectual Property: A creation of the intellect that has commercial value, which includes copyrighted property such as literary or artistic works and ideational property, such as patents, appellations of origin, business methods and industrial processes.

Joint Venture: A business agreement or partnership between two or more individuals that is limited to a single enterprise that involves the sharing of resources, profits, losses and control.

Limited Liability Partnership: Liability of all partners is limited. In most cases, the partners are not 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 where the business is managed by one or more general partners. Capital is provided by limited partners who do not participate in management, but share profits and their liability is limited to their respective capital contributions.

Non-Disclosure agreement: A contract whereby one promises to treat information confidentially and not give out information without proper authorization.

Non-profit corporation: A corporation that benefits members of an organization for a public purpose. The business cannot be designed for profit-making purposes and the profits must be used to benefit the organization.

Partnership: Owned by two or more people and are personally liable for all business debts and obligations.

S corporation: A corporation with a limited number of shareholders that is treated as a partnership for tax purposes.

Sole proprietorship: A business owned and operated by one person. He or she is personally liable for all business debts and obligations. The owner and the business are one entity and profits are reported on the owner’s personal tax return.

Trademark: A name, symbol, or other device identifying a product, officially registered and legally restricted to the use of the owner or manufacturer.

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