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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 is the process by which a corporation is recognized as a separate legal entity under state law. To incorporate, the founders must draft articles of incorporation and file those with the relevant state agency â often the commerce department or Secretary of State â and pay any required filing fees.inally, the choice of where to incorporate will determine the amount of state taxes paid by the corporation, and state tax rates vary greatly. The state of incorporation is the domicile of the corporation.