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What Are Articles of Incorporation?
Also known as a certification of charter or formation, articles of incorporation refer to a legal document that you're required to file with your state government if you intend to incorporate your business. It's mandatory regardless of the state in which your business is located. These articles include certain information about your new corporation.
Some people think that articles of incorporation are the same as bylaws, which is untrue. Bylaws are the rules and regulations for governing a corporation and facilitating the establishment of the roles and duties of its directors and officers. Articles of incorporation work together with bylaws to form your company's legal backbone.
What's the Purpose of Articles of Incorporation?
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Articles of incorporation are important documents because they serve as legal proof that your company is established in your state, and provide the state government with information about the main aspects of your business. When you're filing these articles, you have to let your state know information such as the purpose of your corporation, the names of every incorporator, the identity of your registered agent, the number of authorized shares, and the amount of common stock.
In states where you have to submit a copy of your corporation's bylaws, your articles of incorporation can help ensure your company will operate smoothly. As a business owner, you can benefit from filing articles of incorporation in a number of ways. By legally incorporating your business, you'll be able to protect yourself from being personally liable for the debts of your company. Additionally, you can sell stocks and raise capital more quickly after your company becomes a corporation.
What's Included in the Articles of Incorporation?
Articles of incorporation may vary from one state to another, but typically include the following information:
- Name and principal office address of your corporation.
- Purpose of your corporation. In most states, you're allowed to state a broad and general business purpose for your company, so you don't need to be specific.
- Name and address of the registered agent of your corporation. This agent is the individual or company you appoint to directly receive all important state and legal communications and documents on behalf of your company. Some states require a registered agent to sign a legal document as an agreement to act as an agent for a corporation.
- Type of corporate structure. Your corporate structure can be non-stock corporation, nonprofit corporation, or others.
- Name and address of each member of your corporation's initial board of directors. Some states don't require you to provide this information.
- Number and type of authorized shares your company intends to issue, which may include common shares and preferred shares. This information can be used for calculating taxes and fees.
- Duration of your business if you don't plan for it to exist on a perpetual basis. In some cases, people establish corporations that are meant to exist for a limited time only.
- Name and address of each incorporator. Incorporators sign the articles of incorporation and ensure they're properly filed. They can be anybody, not necessarily a shareholder, director, or officer in the corporation. If you aren't an incorporator, you'll provide such information about an incorporator instead.
- Signatures of the incorporators.
Some companies may decide to amend their articles of incorporation after they've established their business status. You can do this by filing restated articles of incorporation, which are also known simply as a restatement.
Does a Foreign Business File the Same Articles of Incorporation?
Articles of incorporation are meant for American corporations. If your company is a foreign corporation operating in the United States, you're required to file a certificate of registration instead. Similar to articles of incorporation, this legal document may vary in application process and content from state to state.
What's the Difference Between Articles of Incorporation and Articles of Organization?
Articles of incorporation are similar to articles of organization in that they're both a requirement for establishing the legal business structure of a company. However, articles of incorporation are part of the process of adopting a corporation structure, while articles of organization are for businesses that intend to become limited liability companies (LLCs), which belong to a completely different business classification.
LLCs offer some of the same benefits as corporations, such as protection against personal liability for business debts and lawsuits. However, unlike corporations, they don't allow easy transfer of holdings, making them unsuitable for businesses that plan to have external investors. Before you file either legal document, you should check the rules and regulations of your state. In some states, articles of incorporation are used interchangeably with articles of organization. Here is an article about the advantages of a corporation .
Which Types of Businesses Can Use Articles of Incorporation?
Filing articles of incorporation is the right option if you want to create a separate entity for your business. This can reduce your personal risk because your company will be responsible for its own financial losses.
You can use articles of incorporation regardless of the type of business you own. You may start your company as a corporation or launch your business as a sole proprietorship first and then change it to a corporation later. If you plan to set up a small business, consider opting for an S corporation, which pays taxes only on dividends. Large businesses usually become C corporations, which are required to have a board of directors and pay corporate taxes. Here's an article about the differences between a C corporation and an S corporation .
How to Fill Out Articles of Incorporation
The first thing you need to do is structure your business as a corporation. Each state may have its own specific documents for filing articles of incorporation, but the forms typically include a number of questions about your business and its owners. You can easily find these documents online, but you shouldn't be surprised if they aren't referred to as articles of incorporation. Although they may differ by state, articles of incorporation usually come in a fill-in-the-blank format and ask similar questions. Here's an example of an articles of incorporation form .
How Do You Submit Articles of Incorporation and How Much You Need to Pay?
After filling out your articles of incorporation, you can submit them either in person or via mail to the Secretary or Department of State's Office. Depending on your state, you may also have the option of submitting the forms electronically on the official website of the Secretary of State's Office. The fee for filing articles of incorporation also varies from one state to another, but it typically ranges from $50 to $300. Here's a step-by-step guide to forming a corporation .
Upon submitting your articles of incorporation and paying the filing fee, the Secretary of State's Office will check your documents to make sure they contain all the required information and the name of your corporation isn't already in use. If your forms are properly completed, your state government will file your articles of incorporation and establish your company as a legal corporation. Note that some states provide more favorable tax and regulatory environments for corporations, making them more attractive to businesses that want to incorporate. As such, you should find out about the benefits your state offers to corporations.
Learning how to properly file your articles of incorporation can make the process of incorporating your business faster and more hassle-free. If you need more information about forming a corporation, feel free to contact ContractsCounsel .
Meet some of our Articles of Incorporation Lawyers
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