- The filing of articles of incorporation is legally required for any business owner who is considering structuring a new or established corporation as a professional corporation, non-profit corporation or other classification.
- Each state has different required documents and rules for filing articles of incorporation. All files are handled by the Secretary of State.
- Applications for articles of incorporation are reviewed by state officials, and as long as all regulations are followed and the appropriate fees are paid, the company is notified of its corporate status.
Starting your own business is a big step and the legal issues involved can be confusing. Thinking about a business idea is difficult enough, but then there are endless legal documents to fill out and technical details to deal with, especially if you are structuring your business as a corporation. Here’s what you need to know about one of the first and most important steps in building your business: filing your articles of incorporation.
What are articles of incorporation?
Articles of incorporation, sometimes referred to as a certificate of incorporation or charter, are a set of documents filed with a government agency to legally document the formation of a corporation. This type of legal document contains general information about the company, such as the name and location of the company.
Articles of incorporation are easy to confuse with bylaws, which set out the rules and regulations that govern a corporation and help establish the roles and duties of the directors and officers of the corporation. The Articles of Association work in conjunction with the Articles of Incorporation to form the legal backbone of the business. [Read related article: What Is a C Corporation?]
Why are articles of incorporation important?
Articles of incorporation are important because they establish a company in its home state, informing the state of key aspects of the business. Upon filing, the business owner informs the State of the purpose of the business, the name and address of the registered agent, the number of shares authorized and the number of common shares, as well only the names of all the founders.
Some states also require a copy of the company’s articles of association. Articles of association help keep a company running smoothly by outlining the rights and responsibilities of shareholders and the board of directors.
A business owner benefits from articles of association in several ways. By making your business a legal one, you are protecting yourself from business debt. After incorporation, you can raise capital quickly through the sale of shares. [Are you interested in business plan software to help you get your company off the ground? Check out our reviews and best picks.]
What is in the statutes?
The statutes include the following information, with some variation depending on the state:
- The name of your business or company.
- The name and address of your company’s registered agent (the person or business to which the state government will direct all essential legal and state documents and communications).
- The type of business structure (which may include a designation of your business as a non-profit, non-stock corporation, or other class).
- The names and addresses of all members of your company’s board of directors.
- The type and amount of authorized shares available to your business. “Authorized shares” means the maximum number of shares that your company can issue. Authorized shares may include common shares and preferred shares.
- The duration of the activity (if it is not permanent).
- Your name, signature and address. If you are not the founder of the company, you will provide this information to the founder instead.
Some companies may wish to change their statutes once their corporate status has been established. You can do this with a restatement, also known as an updated articles of incorporation.
How are articles of incorporation different for a foreign company?
The Articles of Incorporation are intended for US corporations. Instead, a foreign company operating in the United States must file a registration certificate. This legal document also varies in content and application process by state.
Are the articles of incorporation the same as the articles of incorporation?
Articles of incorporation and articles of incorporation are similar documents, with one main difference: Articles of incorporation are intended for corporations seeking to form a corporation, while articles of incorporation are intended for Limited Liability Companies (LLCs) – a classification of entirely different business according to Internal Revenue. Coded. Establishing a business as an LLC provides legal and financial protections to the business owner. Limited liability companies are generally preferred over corporations for businesses that plan to own real estate or other assets that change in value.
Like corporations, LLCs offer tax and liability benefits in accordance with the provisions of the Internal Revenue Code. Unlike corporations, LLCs cannot easily transfer assets and are not a good choice for those looking to have outside investors. Before you file either legal document, you should review your state’s rules and regulations. In some states, the articles of incorporation and the articles of association are used interchangeably.
When can I use the articles?
The articles of association separate the business owner from the business. The articles of association create a separate legal entity for the company. Incorporation reduces a business owner’s personal risk, as the business becomes financially responsible for its debts and legally responsible for lawsuits.
Any type of company can file articles of association. A new business can be started as a corporation, or a business structured as a sole proprietorship can later become a corporation. Small businesses typically become S corporations and pay taxes only on dividends, while large corporations often become C corporations, which pay corporate taxes and must have a board of directors to operate.
How to fill in the forms?
The first step is to structure the business as a corporation. The specific documents vary by state, but each includes several questions about the business and its owners. Forms are easy to find online, but don’t worry if they have a name other than the Articles of Incorporation.
Despite variations by state, the forms all ask similar questions and use a fill-in format. Crucial information includes the name of the company or company, the recipient of all legal notices and official mailings, the object and duration of the company, the founder, the directors, the number of authorized shares that can be be issued and the number of classes of shares. the company will be authorized to issue.
Where do I submit the forms and how much are the filing fees?
Once you have completed the appropriate documents, you can submit them by mail, in person at the Secretary’s or State Department’s office, or electronically at the Secretary’s or State Department’s website, depending on your state. . Filing fees also vary by state, but typically range from $ 50 to $ 300. Other fees may apply at time of deposit, again depending on condition.
Once you have completed all of the forms and paid all fees, the Secretary of State’s office will review the forms to ensure that the name is not already in use and that all other information meets the requirements of the State. If everything is correct, the state files the forms, making the business a legal corporation. According to Investopedia, some states offer more favorable regulatory and tax environments, attracting more businesses that wish to incorporate.
Where can I find the forms?
Each state has a different form, so here are links to each state’s form, which can be completed online or printed, completed, and sent to the Secretary of State’s office.
Chad Brooks contributed reporting and writing for this article.