What Are Articles of Incorporation?

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What Are Articles of Incorporation?

Let me explain directly: articles of incorporation are the formal documents you file with a government body to legally create a corporation. They include key details like your company's name, street address, the agent for service of process, and the amount and type of stock you'll issue. You use these to officially form your corporation.

Key Takeaways

You need to know that articles of incorporation are the documents you file with a government body, usually the state, to mark the creation of your corporation. In the U.S., you file them with the Office of the Secretary of State in your chosen state of incorporation. They cover basics like your company's name, type of corporate structure, and the number and type of authorized shares. Remember, while articles are mostly for external use, documents like bylaws or operating agreements are better for internal management. By filing them, your corporation can get tax advantages, issue stock to raise capital, or protect owners from liability.

Understanding Articles of Incorporation

Many businesses in the U.S. and Canada form as corporations, which means they're established in the state where they operate. To get legal recognition as a corporation, you have to follow corporate law steps, including filing articles of incorporation. These documents register your corporation with the state and act as a charter that recognizes its establishment. They outline the basic info needed to form it, how it's governed, and the relevant state statutes where you file.

Important Note

You should note that articles of incorporation are also called the 'corporate charter,' 'articles of association,' or 'certificate of incorporation.'

Where to File Articles of Incorporation

In the U.S., you file articles of incorporation with the Office of the Secretary of State in the state you choose for incorporation. Some states, like Delaware and Nevada, draw more businesses because of their favorable regulations and taxes, attracting about half of U.S. public corporations. Once filed, the articles become public record, sharing important details about your corporation. Many states charge filing fees, even if your business doesn't operate there. If you're incorporated in one state but doing business in another, you must register there too, paying additional fees and taxes. Fees range from $50 in states like Iowa, Arkansas, and Michigan to $275 in Massachusetts as of 2020, and they can differ based on whether you file online or by mail.

Articles of Incorporation Document Requirements

The specific articles in the document vary by state, but you typically include the corporation's name, the name and address of the registered agent, the type of corporate structure—such as profit, nonprofit, non-stock, or professional corporation—the names and addresses of the initial board of directors, the number and type of authorized shares, the duration of the corporation if it's not perpetual, and the name, signature, and address of the incorporator. Most states require you to state the firm's purpose, but you can keep it broad for flexibility, like Amazon does by saying it's for any lawful activity under Delaware law. Other provisions might limit directors' liability, allow stockholder actions without meetings, or authorize special stockholder meetings. Each state has mandatory provisions you must include, plus optional ones you can choose.

Fast Fact

While domestic companies file articles of incorporation, foreign entities must file a certificate of registration to operate in a given state.

Articles of Incorporation vs. Other Documents

Let's compare articles of incorporation to bylaws: articles are external formation documents you file publicly, while bylaws are internal, setting rules for how your company runs, like processes and organization. Not all states require bylaws, but many want them formalized. Against an LLC operating agreement, articles are for corporations and outline structure, whereas operating agreements are for LLCs and handle internal disputes or member protections—they're more personal. A business license lets you operate in a specific area or industry, with rights more niche than articles, which just legally form your corporation as its highest governing document. Finally, a business plan is an internal roadmap for management and decision-making, shared with investors perhaps, but it's strategic, unlike the purely informational articles required for legal reasons.

Fast Fact

You should keep an internal copy of your articles of incorporation request.

Importance of Articles of Incorporation

You must file articles of incorporation carefully because they're legally required to structure your new business. Your corporation isn't recognized until they're registered. Once incorporated, you can raise capital through stock issuances—you can't sell stock without this step. Corporations often get better tax treatment than individuals. Plus, until incorporated, individuals might be personally liable for company debts, but filing provides some shielding.

Example of Articles of Incorporation

Consider the form from Washington State's Secretary of State—it's a template you complete and submit for review. It requires check marks or yes/no answers for some parts, and written responses for others like the corporation's purpose. This example is for nonprofits, and it ends with a certification where you affirm the info is correct, provide your details, and sign. For instance, the Parrot Foundation filed such a form, specifying dates, structure, and business purpose as part of their incorporation.

What Is the Purpose of the Articles of Incorporation?

The purpose is to legally form your corporation by submitting info to a state agency, which then decides if it recognizes your company. Once done, you gain benefits like those I'll mention next.

What Are the Benefits of Filing Articles of Incorporation?

Filing lets your company become officially incorporated, opening up favorable tax benefits, the ability to issue stock for capital, and different liability for owners over company debts.

How Do You Write Articles of Incorporation?

You file them with your state's Secretary of State using their form, which asks for details about your new corporation. Fill it out and submit it back for review—they'll contact you if needed.

Can One Person Submit Articles of Incorporation?

Yes, you can incorporate with just one person, who handles everything and is the sole shareholder, listed as the only member on the articles.

The Bottom Line

If you want your company to become a corporation, file articles of incorporation with the state agency—it's required and provides key info about your business and incorporators. Unlike internal operating documents, these help external parties evaluate and legally form your corporation.

What Are Articles of Incorporation?

Highlights