7 Differences Between Inc and Corp

By: Brad Nakase, Attorney

Email  |  Call 888-600-8654

Since she was a child, Ekaterina has always loved making jewelry. She has since graduated from making macaroni necklaces into constructing works of art out of diamonds, emeralds, and rubies. Ekaterina has reached a certain level of success with her business, and she now has three jewelry stores in Los Angeles: one in Downtown, one in Beverly Hills, and one in Manhattan Beach. Because of the growing size of her business, Ekaterina is in the process of turning her jewelry company into a corporation. She has heard about the benefits of incorporation, including the protection from liability. Ekaterina has a family, and in the event of a lawsuit, she does not want her livelihood to be taken away. She has also heard that incorporating one’s business can lend it legitimacy. Ekaterina would like to compete with Cartier and Swarovski, so she could use every bit of credibility she can find. That said, she still has some questions about the general concept of incorporation. Specifically, she has heard both the abbreviations “Inc.” and “Corp.” used. She would like to understand the difference between these two terms and if there is any significance behind it. Ekaterina is aware of the importance of incorporation and wants to be sure she understands the fine details.

1. What is Inc. and Corp?

Inc. is the abbreviation for incorporation, while Corp. is the abbreviation for corporation. Both of these abbreviations are used by entities that have been incorporated.

So, what is Inc.? Inc. is merely the abbreviation for incorporated. Incorporation refers to the process of forming a corporation. A corporation may also be referred to as an incorporated company, which is an entity that is legally separate from its owners or founders. Incorporation (being incorporated) protects the individual founders or owners from liability. As a legal entity of its own, a corporation is liable for its own debts and taxes. A corporation is also able to sell stocks and pax taxes.

2. Should I Use Inc. or Corp.?

Either abbreviation can be used in the name used to register your business. Practically speaking, there is no difference between Inc. and Corp. when it comes to legal structure, limited liability, taxes, and compliance. That said, both abbreviations cannot be used at the same time. For instance, there cannot be Ekaterina’s Fine Jewelry Inc. Corp. This would not make any sense. A business also needs to be consistent with using one abbreviation. This means that the abbreviations are not interchangeable. If Ekaterina decides on using Inc., then she must stick with using “Inc.”

3. Do I need to Include Inc in My Logo and Stationary?

In most states, corporations are required to have a corporate abbreviation attached to their name to indicate their incorporated status. Examples of these designations are “Inc.,” “Corp.,” and “Co.”

Once a company registers its name using Inc. or Corp., these abbreviations must be used in all legal paperwork. The abbreviation may be a small detail, but it is important. It indicates that the business is its own legal entity with privileges and liabilities distinct from its owners.

4. Can Inc own property and file lawsuits?

As its own entity, a corporation can file lawsuits, be sued, conduct business, and own property. A business does receive legal protections upon incorporation which help it receive funding.

5. What are company shareholders?

Company stocks shares may be defined as ownership interests. Shares may be granted, sold, or inherited.

Shareholders do not risk losing personal assets by investing in a company. Their liability is limited courtesy of the fact that the company is a corporation.

6. Who controls an Inc.?

The shareholders are responsible for electing a board of directors, and this board is in charge of managing the corporation and monitoring its operation. Directors and officers can purchase shares in the company.

7. Who needs to file an article of incorporation?

State law regulates the forming of corporations. In order to form a corporation (Inc.), it is necessary to complete and file Articles of Incorporation with the Secretary of State in the relevant state where the company is located. Articles of Incorporation may also be referred to as the company’s charter. This document must include the following:

  • The name of the corporation, which needs to be unique and not misleading in nature
  • The address of the corporation’s main office
  • The life span of the corporation (can be indefinite)
  • A description of the corporation’s business activities

Once these Articles are filed with the relevant Secretary of State, the corporation is “born,” unless it is planned to be started at a later date.

Corporations tend to be complex and expensive to manage, so the U.S. Small Business Administration recommends that small businesses not incorporate until they become sufficiently large and capable of handling the costs and difficulty.

We want to hear your story.

0 + 2 = ?

HR Career Pathway

HR Career Pathway

Discover how to shape your HR career pathway effectively, utilizing insights on skills, gaps, and tools available for your professional growth. Learn strategies for navigating various HR career routes to enhance your development and impact.
Certifications For HR

Certifications For HR

Explore nine HR certifications to enhance your career prospects and demonstrate your knowledge of best HR practices. Discover how certifications can increase your earning potential and make you more competitive in the HR field.
HR Roles

HR Roles

Explore how HR roles have evolved from basic administrative functions to strategic tasks that enhance organizational performance and employee engagement. Learn about the crucial roles in HR that drive company success and adapt to technological and workplace changes.
Succession Planning

Succession Planning

Understand why effective succession planning is crucial for organizational continuity and competitiveness, and how a lack of planning can impact businesses. Discover how structured succession plans can benefit organizations by preparing future leaders and ensuring role continuity.
RACI Matrix

RACI Matrix

The RACI matrix is a crucial tool for HR professionals to delineate roles and enhance project management by clarifying responsibilities and communication. Implementing a RACI chart streamlines processes and boosts efficiency in complex projects.
Combined Assurance

Combined Assurance

Combined assurance enhances internal auditing by fostering collaboration across departments, improving efficiency, and reducing overlap. It boosts risk mitigation and confidence in governance, crucial for organizational success.
How To Start LLC

How To Start LLC

Navigate the process of creating an LLC in California, from naming your entity to fulfilling state tax obligations. Highlighting key steps including selecting a registered agent and drafting an operating agreement.
What is an S corporation

What is an S Corporation

Explore the benefits and considerations of electing S corporation status for your business, focusing on tax advantages and eligibility criteria. Determine if an S Corp is the right choice for you with insights on structure and taxation.
Sole proprietor vs S Corp

Sole Proprietor vs S Corp

Compare Sole Proprietorship and S Corp to find the best fit for your small business. Understand the advantages and challenges of each to make an informed decision.
What Is Recruiting- Definition, Process, and Types

What is recruiting? Definition, process, and types

Explore the intricate world of recruiting, from sourcing to hiring, and learn about its vital role in aligning candidates with a company's culture and needs. Understand the process, types, and the significance of recruiting in building a successful team.

How to Start a Corporation

How to form a corporation in 12 steps. This guide simplifies the process of starting a corporation in California, highlighting the benefits such as legal protection and tax savings for business owners. It covers key steps like selecting a business name, filing legal documents, and appointing directors.

How to transfer LLC ownership?

Two common ways to transfer LLC ownership are to conduct a partial sale to a third party or sell your entire LLC to a third party.

Why Do Companies Incorporate in Delaware?

The State of Delaware offers companies lenient tax benefits and liability protection. Also, companies that incorporate in Delaware do not have to do business in the state.

Inc vs. LLC

Incs. is short for incorporated, and LLC is short for Limited Liability Company. For Inc., where the owner elected to be an S corporation, the profit and loss are passed to its shareholders, whereas income and loss in an LLC flow through to the members.

What is an LLC and how does it work

An LLC is a business entity that protects the owners with limited liability protection. An LLC also offers pass-through taxation, which means the company’s profits and losses pass through to the owner’s personal tax level.

What Is a Disregarded Entity?

A “disregarded entity” refers to an entity with one owner and not organized as an entity such as a corporation, LLC, or partnership. For federal tax purposes, the disregarded entity and the owner, who is a natural person, are not treated separate.

© Copyright | Nakase Law Firm (2019)