When a business is incorporated, it becomes a legal entity in much the same way that a human being is considered a “legal” entity. This means that in the eyes of the law, the incorporated business is considered an entity that exists in complete disassociation from the groups or individuals who founded that business and who carry out its day to day operations. By completing a charter application and filing it with the state of Alabama, business owners can form their corporation and have their business put on legal record as being incorporated.
Some of the facts about the incorporation that are included in the filed legal record include the purpose of the business as an incorporated entity, the names and contact information of the individual incorporators, the kinds of capital stock that the corporation is legally permitted to issue as well as the amount of capital stock allowed to be issued, and the legal rights of the stockholders of the incorporated entity. Most businesses incorporate because of the legal liabilities that the business may accrue. Those liabilities can only be satisfied through assets in which the business’s owners have invested.
Incorporation is important to business owners in this regard because if the business were an asset held by the owners of the business rather than being its own legal entity, those owners would be liable in any legal matters relating to the business and could have their personal assets seized. It is also much more difficult for an unincorporated business to get approval for loans from banks and lenders because the personal credit worthiness of the owners is considered rather than that of the business. Business owners in Birmingham who are interested in incorporating their business are advised to contact a qualified business incorporation attorney.
