Incorporated Business Definition

What is an incorporated business?

An incorporated business is one that the government recognizes as a separate legal entity. A business is incorporated when someone files legal paperwork with the state and creates a business entity. What’s more, incorporating a business creates a legal distinction between the business and the business owner. 

Thus, an incorporated business is one that’s separate from its owners. Incorporating a business helps shield the owner’s personal assets and makes it easier to manage the business’s finances. 

Incorporated Business Considerations

Wondering whether incorporation is a smart idea? Here are some things that entrepreneurs should consider before taking the plunge into incorporation. 

Incorporated Business Advantages

Incorporated business benefits might include:

• Separating the business’s assets from owners’ personal assets
• Simplifying personal and business taxes
• Reducing the amount of money the owner pays in taxes each year (potentially)
• Limiting personal liability
• Setting up the business for potential growth 
• Making it easier to transfer ownership of the business in the future

Incorporating a business may help propel it forward to the next level.

Incorporated Business Disadvantages

The disadvantages of incorporating a business revolve around having to do more paperwork and tax status:

• The government may tax business profits twice (at the business level and personal level)
• Most incorporated businesses need to file an annual report (varies by state and business type) each year

If someone’s unsure about whether incorporating is wise, they’d be prudent to consult with an accountant to weigh the pros and cons. And ZenBusiness’s annual report service can help entrepreneurs navigate that annual report drawback with ease each year.

Other Names for Incorporated Business

Another way to refer to an incorporated business is by the type of its legal business entity (e.g., LLC, S Corp). There are several different types of incorporated businesses.

Incorporated Business Examples

What are incorporated businesses? Examples of businesses that fall under the incorporated business definition include:

• Limited liability company (LLC)
• S Corporation
• C Corporation
• General partnership
• Limited liability partnership
• Limited partnership

Incorporating a business allows an owner to put up a shield between their assets and their business. A business attorney can help entrepreneurs evaluate which structure might be the best fit.

When should a business owner incorporate?

Incorporating a business is an important decision and can help take a business to the next level. Typically, incorporating a business is a good idea if:

• The owner wants to hire employees
• The owner is considering opening a second (or third) business location
• The business is making a lot of money
• The business owner signs business contracts (like vendor contracts) 

If someone wants to form an LLC or corporation, ZenBusiness can help. With their streamlined business formation plans, it can take mere minutes to prepare and file business startup paperwork. More than 850,000 businesses have used ZenBusiness’s services to help set their business up for success.  

How does someone incorporate a business?

What are the steps to incorporate a business? Look no further. Here are the basic steps to incorporating a business:

1. Come up with an awesome name that meets the state’s naming requirements (and use the ZenBusiness name reservation service to lock it down)
2. Decide on a business entity (e.g., LLC, corporation)
3. Pick a registered agent (or use the ZenBusiness registered agent service to find one)
4. File the incorporation paperwork
5. Get an EIN 
6. Draft an operating agreement

Feeling dizzy just thinking about all those steps? ZenBusiness can help.

Additional Resources:

• Incorporation Definition
• Business Incorporation Explained
• Articles of Incorporation Definition
• Business Intelligence Definition
• LLC vs. Inc. / Corporation
• Direct Incorporation vs. Bizee