What are the important purposes of incorporation?
It is possible to do anything by the aid of the conception of incorporation. Of course, there are limitations involved in the process. The following are the purposes or uses of incorporation:-
(1) Incorporation secures unity and permanence involved in the shifting multitude with whose common interests and activities it has to deal.
(2) Incorporation is used to enable traders to trade with limited liability.
(3) Incorporation secures tax-avoidance. By means of a limited company, a tax-payer can continue to spread a fluctuating income over the years and divide a large income into smaller parts to be distributed within his family.
The aim of the law has been to reduce the complex form of the collective ownership and action to the simple and typical form of individual ownership and action.