Advertisers and business consultants often encourage entrepreneurs to incorporate, and large corporations dominate the business landscape. Despite the omnipresence of corporations, many people wonder just what incorporation does and what purpose it serves.

Definition

According to Princeton University, incorporation is the process of consolidating a number of things into a single entity. In the business world, a corporation might combine personnel, services, ideas, products and processes into a single organization that is legally recognized as one unit.

Early History

The first mentions of incorporation date to 1767, when they appeared in British documents governing proceedings related to business transactions.

Benefits

In business, incorporation allows an entrepreneur to establish a new legal entity for the purposes of conducting business. This new entity relieves some personal liabilities an unincorporated businessman would bear himself.

Considerations

Incorporation provides a number of benefits, but corporations must pay taxes as a separate entity and could, depending on the earnings, pay higher taxes than individuals and unincorporated businesses.

Controversy

Some people believe corporations relieve too much liability from their individual components. "The Corporation," a 2003 Canadian documentary film directed by Mark Achbar and Jennifer Abbott, labeled commercial corporations "psychopathic."

Source:

Princeton: Definition of Incorporation

University of Wisconsion: History of Capitalism

Resource:

The Corporation (Movie, 2003) Official Website