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Incorporation (business) Incorporation is the formation of a new corporation (a corporation being a legal entity that is effectively recognized as a person under the law). The corporation may be a business, a non-profit organization, sports club, or a government of a new city or town.
Incorporation theory refers to the act of the U.S. Supreme Court applying federal protections in the Bill of Rights to the states using the Fourteenth Amendment to the U.S. Constitution, according to Bill of Rights Institute. Under this theory, both federal and state laws must adhere to certain amendments in the Bill of Rights. Keep Learning.