Thinking about starting a business is a big decision and the legal issues involved with it can be a bit confusing. It is challenging to handle the countless legal documents and technicalities that are involved while starting your own company.
Besides, confirming the company’s name and establishing a brand identity, a new company may also seek legal recognition. The company may achieve brand identification by filing articles of incorporation, which are documents that establish business entities.
Article of incorporation is the first and most crucial step in incorporating your business, Here in this article let’s discuss what an article of incorporation is, its brief, and its requirements:
What are Articles of Incorporation?
The article of incorporation is also known as a certificate of formation or a charter. It is a set of documents filed with a government body to establish itself as a legal business organization. The article of incorporation contains general information about the company, like the business name, agent of service of purpose, and location. A business’s article of incorporation is a public record that allows the public to view information about the company.
Article of Incorporation is important in a corporation’s structure and functioning. Let’s discuss some benefits an organization can exercise:
- Legal recognition:
Article of incorporation gives you legal company recognition and enhances the credibility of potential investors, partners, and customers. This separates the corporation’s liabilities from its owners or shareholders, providing limited liability protection.
- Corporation structure:
A corporate charter outlines the rules and procedures for decision-making, directors, conducting members, and voting. It establishes a clear framework for governance, ensuring transparency and protection of shareholders’ interests.
- Access to legal rights:
Article of incorporation enables an organization to have a legal privilege, like the ability to enter into contracts, sue or be sued, hold property, and issue stock, which increases the opportunity for growth, expansion, and intellectual property protection.
- Regulatory compliance:
By filing a certificate of incorporation, the business fulfills the regulatory requirements imposed by the governing authorities, which helps build trust with the stakeholders and minimizes the risk of legal disputes or challenges.
Why are Articles of Incorporation important?
Articles of incorporation are important because they serve as legal proof that your company is established in your state. It includes important provisions that provide the state government with basic information about the company and allow the company to opt out of certain default rules in the corporation statute. Other benefits of the article of incorporation include:
- Protection of liability:
By making the business a legal corporation, owners can protect themself from their organizations’ debt.
- Ability to issue stock:
You can raise capital through the sale of your stock to the public, this not only increases the visibility but also makes it easier to raise the capital.
- Tax advantages:
An officially incorporated business receives more pleasing tax advantages than independent or personal rates.
Where to File Article of Incorporation
In the US, articles of incorporation are filed with the office of the secretary of state in the state where the business chooses to incorporate. Many states charge filing fees for a business that incorporates in the same state, whether the business operates there or not. Businesses that are incorporated in one state and are physically located or doing business in another state must register in the other state as well.
While filing in your home state is typically the most straightforward option, there are other options. If you choose to incorporate in a state other than your own, you can enjoy several benefits. It’s better to do some research before choosing to incorporate it in your home state to determine if it’s the best state for your needs and business.
Articles of Incorporation Document Requirements
Articles of incorporation are usually similar worldwide, but the exact terms still vary across jurisdictions. The following articles are typically included:
- Corporation name and registered agent’s address.
- The corporate structure includes profit companies, nonprofit corporations, non-stock corporations, professional corporations, and so on.
- The names and addresses of the first board of directors.
- Registered agent name and address, and their consent of appointment.
- The number and kind of authorized shares.
- Duration of the corporation, assuming it was not founded to remain forever.
- Name, signature, and address of the incorporator, who is in charge of forming a corporation.
- Most states also require the articles to identify the firm’s objective; however, the company might define it broadly to ensure operational flexibility.
Other clauses included in a company’s articles of incorporation may include the limitations of directors’ responsibility, shareholder actions taken without a meeting, and the right to summon special stockholder meetings.
Each state has its guidelines regarding the article of Incorporation. In addition to the certificate of incorporation, the state can ask for the filing of supporting documents such as consent of appointment by the registered agent and a cover sheet providing instructions related to the filing.
How to file Articles of Incorporation?
Once your organization files for its state license, you can now start to gather the required documents and file the articles of incorporation documents, Following is the step-by-step guide:
- Collect the required documents
The first and foremost step while filing an Article of Incorporation would be to gather all the required pieces of information and documents regarding your organization. (i.e. corporation’s name, address, directors and shareholder’s information, registered agent, and tax identifications, number and class of your shareholders and directors).
- Complete the form
After all the required documents and information are ready now you can download the form from your state secretary’s agency, or you can also go in person and file the form.
- Review
Review all the filled information in your article of incorporation form. Check for typos, spelling errors, and the information you’ve filled in. Ensure to make all the necessary document revisions before submission.
- File with your state
After all the required documents are reviewed and signed the article of incorporation, you can now file the form with the same state where your business operates. You can pay the filing fee and submit all the required documents, such as government-issued identification.
- Get Approved
After your articles of incorporation are reviewed and submitted, you will need to wait until your state authorities approve them. Once it gets approved you will receive a certificate of formation from the state which is the official document that the company is a legal corporation.
You can keep both the hard copy and digital copy of your article of incorporation as a record. Now you can obtain an EIN (Employee Identification Number) from the IRS that helps you establish bank and credit accounts and allows you to file taxes.
Conclusion
The article of incorporation is a necessary document to obtain and register a new corporation with the state. It will help you set the business as its separate entity and allow the company owners to legally run the company. You can always connect with Easyfiling to file your Articles of incorporation without any confusion.
Frequently Asked Questions (FAQs)
Are the requirements of Articles of Incorporation always the same?
No, the requirements for forming a corporation are decided by the state. So, filing fees and requirements vary from state to state.
Who writes the Article of Incorporation?
The Articles of Incorporation are written by members of the state’s government offices.
How long will it take to write an Article of Incorporation?
Writing an Article of Incorporation might take a few minutes, but getting approved will take about a week.
Nabin Adhikari
