Articles of Incorporation are a set of formal documents filed with a government body to legally document the creation of a corporation. These documents contain pertinent information such as the firm’s name, street address, and the amount and type of stock to be issued. They legally form the corporation and make it an official legal entity.
Key Takeaways
- Articles of Incorporation are the documents filed with a government body that signifies the creation of a corporation.
- In the U.S., these documents are typically filed with the Office of the Secretary of State where the business chooses to incorporate.
- They include key information such as the company’s name, type of corporate structure, and number and type of authorized shares.
- Articles of Incorporation are used mostly externally, whereas other documents like bylaws and business plans are more useful internally.
- Filing Articles of Incorporation can provide tax advantages, allow the issuance of stock to raise capital, and limit owners’ liability.
Understanding Articles of Incorporation
Many businesses in the U.S. and Canada are formed as corporations. To be recognized legally, a business must incorporate by taking certain steps required under corporate law. One crucial step is filing a document known as Articles of Incorporation.
Articles of Incorporation are necessary to register a corporation with a state. They act as a charter recognizing the establishment of a corporation. The document outlines the basic information needed to form and govern the corporation and includes statutes from the state where it is filed. These documents may also be referred to as a “corporate charter,” “articles of association,” or “certificate of incorporation.”
Where to File Articles of Incorporation
In the U.S., Articles of Incorporation are filed with the Office of the Secretary of State in the state where the business chooses to incorporate. Some states, like Delaware and Nevada, are more favorable due to regulatory and tax benefits, attracting many public corporations.
Filing fees vary by state. For instance, fees could range from $50 in Iowa up to $275 in Massachusetts. Fees may also differ based on the method of filing—online or by mail.
Articles of Incorporation Document Requirements
While specific requirements can vary by state, typical items included in Articles of Incorporation are:
- Name of the corporation
- Name and address of the registered agent
- Type of corporate structure (e.g., profit corporation, nonprofit corporation)
- Names and addresses of the initial board of directors
- Number and type of authorized shares
- Duration of the corporation, if not perpetual
- Name, signature, and address of the incorporator
States also typically require a statement of the firm’s purpose. Some provisions may include the limitation of directors’ liability and actions by stockholders without a meeting.
Articles of Incorporation vs. Other Documents
Articles of Incorporation vs. Bylaws
Bylaws are internal documents that set the rules and procedures for a company’s management, unlike Articles of Incorporation that are filed externally.
Articles of Incorporation vs. LLC Operating Agreement
Articles of Incorporation form a corporation, while LLC Operating Agreements are specific to LLCs and dictate internal disputes and member agreements.
Articles of Incorporation vs. Business License
A business license allows a company to operate within a specific jurisdiction, whereas Articles of Incorporation legally form the organization.
Articles of Incorporation vs. Business Plan
A Business Plan is an internal strategic document for managing the business, whereas Articles of Incorporation are required for legal formation.
Importance of Articles of Incorporation
Articles of Incorporation are legally required to structure a new business or company. They allow a corporation to sell stock and offer liability protection to business owners, providing significant benefits like favorable tax treatments and shielding owners from some personal liabilities related to company debts.
Example of Articles of Incorporation
Consider the initial requirements from the Secretary of State of Washington’s form. Some sections require simple check marks or a ‘yes/no’ choice, while others need comprehensive written responses.
Frequently Asked Questions
What Is the Purpose of the Articles of Incorporation?
Their primary purpose is to legally form a corporation by submitting essential information to a state agency, which then recognizes the corporation as a formal entity.
What Are the Benefits of Filing Articles of Incorporation?
Filing Articles of Incorporation allows a company to receive tax benefits, raise capital through stock issuance, and establish limited liability for its owners.
How Do You Write Articles of Incorporation?
They are filed with your state’s Secretary of State office using a provided form. Complete the required fields and submit the form for state review.
Can One Person Submit Articles of Incorporation?
Yes, a single owner can submit Articles of Incorporation and assume full responsibility for the company’s aspects as the sole shareholder.
The Bottom Line
Filing Articles of Incorporation is a necessary step in forming a corporation. This important document helps external parties understand and evaluate the corporation, paving the way for raising capital and granting liability protection to its owners.
Related Terms: Bylaws, LLC Operating Agreement, Business Plan, Corporate Law, Stock Issuance.
References
- Office of the Illinois Secretary of State. “Articles of Incorporation”.
- Iowa Secretary of State. “Business Entity Forms and Fees”.
- Arkansas Secretary of State. “Forms / Fees / Records Requests”.
- State of Michigan. “Entrepreneur’s Guide”, Page 26.
- Secretary of the Commonwealth of Massachusetts. “Corporations Division Filing Fees”.
- U.S. Securities and Exchange Commission. “Restated Certificate of Incorporation of the Company”.
- Washington Secretary of State. “Instructions - Articles of Incorporation Nonprofit Corporation RCW 24.03A”.
- Parrot Foundation. “Articles of Incorporation”.
