When starting a business, there are many legal terms that can be confusing, such as “founded” and “incorporated.” It’s important to understand the difference between these two terms to ensure that you are using the proper one for your business.
So, which one is the proper word? The answer is that it depends on the type of business you are starting. “Founded” is typically used for businesses that are not incorporated, while “incorporated” is used for businesses that have gone through the process of becoming a legal corporation.
When a business is founded, it means that it has been established or started. This can refer to any type of business, whether it is a sole proprietorship, partnership, or corporation. However, if the business is not incorporated, it is not considered a legal entity and does not have the same protections and benefits as a corporation.
On the other hand, when a business is incorporated, it means that it has gone through the process of becoming a legal corporation. This involves filing articles of incorporation with the state and following certain legal requirements. Once a business is incorporated, it becomes a separate legal entity from its owners, which provides liability protection and other benefits.
Now that we understand the difference between “founded” and “incorporated,” let’s take a closer look at the process of incorporating a business and the benefits it provides.
Define Founded
Founded is a term used to describe the establishment of a company or organization. It refers to the act of creating something new, typically a business, from scratch. The process of founding a company involves identifying a need in the market, developing a business plan, securing funding, and setting up the infrastructure to support the business.
Founding a company is a complex process that requires a great deal of planning and preparation. It involves a significant amount of risk, as there is no guarantee that the business will be successful. However, successful founders are often able to create innovative products or services that meet the needs of consumers and generate significant profits.
Define Incorporated
Incorporated is a legal term used to describe the process of creating a separate legal entity for a business. This separate entity is created by filing articles of incorporation with the state in which the business is located. Once the articles of incorporation are approved, the business becomes a legal entity that is separate from its owners.
When a business is incorporated, it is granted certain legal rights and protections that are not available to sole proprietorships or partnerships. For example, a corporation can enter into contracts, own property, and sue or be sued in its own name. Additionally, the owners of a corporation are not personally liable for the debts or obligations of the business, which helps to protect their personal assets.
Incorporating a business is a complex process that requires the assistance of an attorney or other legal professional. It involves drafting articles of incorporation, filing them with the state, and complying with various legal and regulatory requirements. However, the benefits of incorporation can be significant, particularly for businesses that are looking to raise capital or protect their owners’ personal assets.
How To Properly Use The Words In A Sentence
When it comes to writing about the establishment of a business, it is essential to use the correct terminology. The terms ‘founded’ and ‘incorporated’ are often used interchangeably, but they have different meanings. In this section, we will discuss how to use these words properly in a sentence.
How To Use ‘Founded’ In A Sentence
The term ‘founded’ is used to describe the creation or establishment of a business. It refers to the point in time when the business was first started. For example:
- John Smith founded his company in 2005.
- The company was founded by a group of entrepreneurs.
When using ‘founded’ in a sentence, it is important to include the name of the person or group responsible for the establishment of the business and the year in which it was founded.
How To Use ‘Incorporated’ In A Sentence
The term ‘incorporated’ is used to describe the legal process of creating a corporation. It refers to the point in time when a business becomes a separate legal entity from its owners. For example:
- XYZ Corporation was incorporated in Delaware.
- The company was incorporated on January 1, 2020.
When using ‘incorporated’ in a sentence, it is important to include the name of the corporation and the state in which it was incorporated, as well as the date on which it was incorporated.
It is important to note that not all businesses are incorporated. Some businesses, such as sole proprietorships and partnerships, are not separate legal entities from their owners. In these cases, it would be more appropriate to use the term ‘established’ instead of ‘incorporated’.
More Examples Of Founded & Incorporated Used In Sentences
In order to gain a better understanding of the proper usage of the terms “founded” and “incorporated,” it can be helpful to examine examples of how they are used in sentences. The following are examples of each term used in a variety of contexts.
Examples Of Using “Founded” In A Sentence
- John founded his company in 1995.
- The non-profit organization was founded to support local artists.
- She co-founded the startup with her college roommate.
- The city was founded in the 18th century.
- The university was founded by a group of educators who wanted to create a more inclusive learning environment.
- The company was founded on the principles of sustainability and social responsibility.
- He founded the organization to provide resources for at-risk youth.
- The church was founded in 1865.
- They founded their relationship on mutual respect and trust.
- The organization was founded with the goal of promoting diversity and inclusion in the workplace.
Examples Of Using “Incorporated” In A Sentence
- The business was incorporated in Delaware.
- The company was incorporated in 2001.
- She incorporated her business to protect her personal assets.
- The nonprofit was incorporated as a 501(c)(3) organization.
- The new policy was incorporated into the employee handbook.
- The design team incorporated feedback from focus groups into the final product.
- He incorporated his love of music into his writing.
- The company incorporated sustainable practices into their operations.
- The organization incorporated new technology to improve efficiency.
- The project plan incorporated input from all stakeholders.
Common Mistakes To Avoid
When it comes to the legal jargon surrounding business formation, it can be easy to mix up terms like “founded” and “incorporated.” However, using these terms interchangeably can lead to confusion and potential legal issues down the line. Here are some common mistakes to avoid:
Using “Founded” Instead Of “Incorporated”
One common mistake is using “founded” instead of “incorporated” when referring to the creation of a business entity. While “founded” may seem like an appropriate term, it does not have the same legal implications as “incorporated.” “Founded” simply refers to the establishment of a business, while “incorporated” specifically means that a business has been registered with the state as a legal entity.
Using “Incorporated” Instead Of “Formed”
Another mistake is using “incorporated” instead of “formed” when referring to the creation of a business entity. While “incorporated” is a commonly used term, it is not the only way to legally form a business. Depending on the type of business and the state in which it is formed, other terms like “organized” or “established” may be more appropriate. It is important to carefully research the legal requirements for forming a business in your state to ensure that you are using the correct terminology.
Not Understanding The Legal Implications
Finally, one of the biggest mistakes that people make when using “founded” and “incorporated” interchangeably is not understanding the legal implications of each term. Incorporation provides a business with limited liability protection and creates a separate legal entity, while simply “founding” a business does not provide these same protections. It is important to understand the legal implications of each term to ensure that you are using the correct terminology and protecting your business.
Tips For Avoiding These Mistakes
- Research the legal requirements for forming a business in your state
- Consult with a legal professional if you are unsure about the correct terminology to use
- Be mindful of the legal implications of each term and use them appropriately
Context Matters
When it comes to choosing between the words “founded” and “incorporated,” context matters. The choice between these two words can depend on the context in which they are used. Let’s take a closer look at how the choice between “founded” and “incorporated” might change in different contexts.
Business Context
In a business context, the choice between “founded” and “incorporated” can depend on the legal structure of the business. If the business is a sole proprietorship or partnership, the word “founded” might be more appropriate. However, if the business is a corporation, the word “incorporated” would be the correct choice. For example:
- John Smith founded Smith’s Bakery in 2005.
- ABC Corporation was incorporated in 1980.
Non-profit Context
In a non-profit context, the choice between “founded” and “incorporated” can also depend on the legal structure of the organization. If the organization is a non-profit association or trust, the word “founded” might be more appropriate. However, if the organization is a non-profit corporation, the word “incorporated” would be the correct choice. For example:
- The American Cancer Society was founded in 1913.
- The Bill and Melinda Gates Foundation was incorporated in 2000.
Historical Context
In a historical context, the choice between “founded” and “incorporated” can depend on the time period being discussed. For example, if you are writing about the founding of the United States, the word “founded” would be more appropriate. However, if you are writing about the incorporation of a city or town, the word “incorporated” would be the correct choice. For example:
- The city of New York was incorporated in 1898.
- The United States was founded on July 4, 1776.
As you can see, the choice between “founded” and “incorporated” can depend on the context in which they are used. It’s important to choose the correct word based on the legal structure, time period, or other relevant factors.
Exceptions To The Rules
While there are general rules for using “founded” and “incorporated,” there are some exceptions where these rules might not apply. Here are some of the most common exceptions:
1. Non-profit Organizations
Non-profit organizations are exempt from using “incorporated” in their name because they are not for-profit businesses. Instead, they use “established” or “founded” to indicate the year they were created. For example:
| Business Type | Correct Usage |
|---|---|
| For-profit business | XYZ Inc. was incorporated in 2005. |
| Non-profit organization | ABC Foundation was established in 2005. |
2. Historical Context
When referring to historical events or figures, it is common to use “founded” even if the organization was technically incorporated. This is because the term “founded” carries a sense of historical significance and importance. For example:
- The city of New York was founded in 1624, even though it was officially incorporated as a city in 1898.
- The United States was founded in 1776, even though it was not incorporated until the ratification of the Constitution in 1788.
3. Common Usage
Sometimes, the common usage of a term overrides the technical definition. For example, many people refer to the popular social media platform as “Facebook was founded in 2004” even though it was technically incorporated. Similarly, many people refer to the popular search engine as “Google was founded in 1998” even though it was technically incorporated as well.
While it is important to use the correct terminology when referring to businesses and organizations, it is also important to consider the context and common usage of the term.
Practice Exercises
Learning the difference between founded and incorporated can be tricky, but with practice, it can become second nature. Here are some exercises to help you improve your understanding and use of these terms in sentences:
Exercise 1: Fill In The Blank
Complete the following sentences with either founded or incorporated:
- The company was __________ in 1995.
- She __________ her own business last year.
- The organization was __________ by a group of volunteers.
- He __________ the nonprofit to help underprivileged children.
Answer Key:
- incorporated
- founded
- founded
- incorporated
Exercise 2: Multiple Choice
Choose the correct word to complete the sentence:
- The company was __________ in 2005.
- a. founded
- b. incorporated
- c. both
- d. neither
- a. founded
- b. incorporated
- c. both
- d. neither
- a. founded
- b. incorporated
- c. both
- d. neither
- a. founded
- b. incorporated
- c. both
- d. neither
Answer Key:
- b
- a
- a
- b
By practicing with these exercises, you can improve your understanding and use of founded and incorporated in sentences. Remember, founded refers to the establishment of an organization, while incorporated refers to the legal process of creating a corporation.
Conclusion
After reading this article, it is clear that there is a significant difference between the terms “founded” and “incorporated.” While both terms refer to the establishment of a company, “founded” refers to the creation of a company, while “incorporated” refers to the legal process of turning a company into a separate legal entity.
It is important to use the correct terminology when discussing the establishment of a company to avoid confusion and miscommunication. By using “founded” when referring to the creation of a company and “incorporated” when referring to the legal process of establishing a separate legal entity, you can ensure that your message is clear and accurate.
Key Takeaways:
- “Founded” refers to the creation of a company.
- “Incorporated” refers to the legal process of establishing a separate legal entity.
- Using the correct terminology is important to avoid confusion and miscommunication.
It is important to continue learning about grammar and language use to ensure that you are effectively communicating your message. By improving your language skills, you can enhance your professional communication and increase your chances of success.
Shawn Manaher is the founder and CEO of The Content Authority. He’s one part content manager, one part writing ninja organizer, and two parts leader of top content creators. You don’t even want to know what he calls pancakes.