Understanding the Differences Between Corporation, Incorporation and Non-Profit

“Corporation”. “Incorporation”. “Nonprofit”.
What do these terms mean and what are the differences between them? These terms refer to company formation and the structure of legal entities. A corporation is an entity that is regarded as a “person” legally. Incorporation simply refers to the process and procedure of forming a corporation.
The purposes and structure of a nonprofit are markedly different from a business corporation. The designation of an organization as a nonprofit or a business would determine if the participants would wish to change into a corporation and the necessary actions needed to give life to the corporation. An expert/firm offering company formation services in India may be able to give you more detailed explanations.
Corporation
Some of the features of a corporation include the following:
It can own properties, conduct business in its registered name, be sued and sue others. Similarly, shares of the company, which are simply ownership interests, can be bought, sold, given to others and inherited.
The liability of its shareholders for business obligations is limited to their investments; their personal assets are not at risk unless they are required by a seller or lender to guarantee the repayment of any debts incurred. A corporation is managed by a board of directors who are elected by the shareholders.
Incorporation
Incorporation refers to the process that creates a corporation. The initiators of the corporation will have to file the charter of incorporation at the State’s Office of Incorporation along with the corporation’s birth certificate which would contain the corporation’s unique name.
Other requirements for the charter to be submitted include the main office address of the corporation, the lifespan of the corporation which may be indefinite and the nature of its prospective business and activities. An affidavit declaring that the corporation is going to be a law abiding entity is also required. The corporation will be incorporated (born) when all these articles/documents are duly submitted.
Non-Profit
Nonprofit organizations are structured in such a way that they use their funds, resources and earnings to further their programs and purposes rather than sharing profits with its investors and owners. The participants of a nonprofit organization may form a corporation if they wish to.
Any nonprofit that conducts very limited business with very minimal funds typically does not need incorporation. And if it does not undergo incorporation, there will be no need to file organizing documents unless, of course, it intends to seek tax exempt from the Internal Revenue Service.
Organizing A Nonprofit Corporation
Just like the charter of a business corporation, the charter of a non-profit will have a unique name, its main office address, as well as the names of everyone on its board of directors. Nonprofits are required to declare that their proceeds and earnings will not be paid out to its directors, participants, and/or officers except as payment for services rendered.
To be able to get a tax exemption under section 501 ©(3), charitable organizations will state only charitable purposes such as poverty relief or that its purpose is restricted to those stated in 501 ©(3). A nonprofit corporation does not have shareholders. Its members may vote to elect a board of directors. Where the corporation does not have any members, then its board will be self-appointed.
So if you’re thinking of starting out a corporation or nonprofit or you would like to incorporate a corporation, you may have to talk with the experts who offer company formation services in India.
