Articles of Incorporation: Definition, Purpose

What Are Articles of Incorporation?

Articles of incorporation refer to a legal document you are required to file with your state government if you want to incorporate a business. Sometimes referred to as a certification of charter or formation, if you are forming a corporation (C Corp, S Corp, B Corp, etc), these legal documents are mandatory regardless of the state your business is located. The articles include specific information about your new corporation that government needs to know.

Some people think that articles of incorporation are the same as bylaws, which is not true. Instead of providing the state government with specific information about the corporation, corporate bylaws establish the rules and regulations for governing a corporation which includes the roles and duties of its directors and officers. Articles of incorporation work together with bylaws to form your corporation’s legal backbone.

What is the Purpose of Articles of Incorporation?

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 is 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.

Example of Articles of Incorporation

Below is an example of articles of incorporation and what they look like and include. Please note, articles of incorporation may vary depending on the jurisdiction and the purpose of the incorporation so it is best to check with a corporate lawyer to confirm.

ARTICLES OF INCORPORATION

Name: [Insert the name of the corporation]

Purpose: [Insert a brief description of the purpose of the corporation]

Registered Office: [Insert the street address, city, state/province, and zip/postal code of the registered office of the corporation]

Agent: [Insert the name and address of the registered agent of the corporation]

Authorized Shares: The corporation is authorized to issue [Insert the number of authorized shares] shares of common stock, with a par value of [Insert the par value of the shares, if any].

Incorporators: The name and address of the incorporator(s) are as follows: [Insert the name and address of each incorporator]

Initial Board of Directors: The initial board of directors of the corporation shall consist of [Insert the number of directors] directors. The names and addresses of the initial directors are as follows: [Insert the name and address of each director]

Indemnification: The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise.

Dissolution: The corporation may be dissolved by a vote of [Insert the percentage of votes required for dissolution] percent of the shareholders.

Amendments: These articles of incorporation may be amended by a vote of [Insert the percentage of votes required for amendment] percent of the shareholders.

Effective Date: These articles of incorporation shall become effective upon filing with the [Insert the name of the state/provincial agency responsible for corporate filings].

IN WITNESS WHEREOF, the undersigned, being the incorporator(s), have executed these articles of incorporation on [Insert the date of execution].

[Insert the signature and printed name of each incorporator]

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.

Are Articles of Incorporation the same as an LLC Operating Agreement?

No, Articles of Incorporation and LLC Operating Agreements are not the same thing and it is important to understand their key differences. On a high level, the documents are used for different types of business entities – corporations vs. LLCs.

Articles of Incorporation are legal documents filed with the secretary of state (state government) to create and form a corporation (C Corp, S Corp, B Corp, etc). They include basic information about the corporation, such as:

• Name
• Purpose
• Registered Office
• Agent
• Authorized Shares
• Incorporators
• Board of Directors
• Indemnification
• Dissolution

LLC Operating Agreements are legal documents drafted for limited liability companies (LLCs) that outline ownership and how it operates. It is an internal document that governs the relationships between the members and not filed with the state government. It typically includes provisions on:

• Management and Voting Rights
• Capital Contributions
• Distribution of Profits and Losses
• Ownership Percentages
• Decision-making Procedures
• Dissolution
• Transfer of Ownership Interests

Understanding both Articles of Incorporation and LLC Operating Agreements are legal documents needed to set up a business entity, it is important to know they serve different purposes for different types of business entities (corporations vs. LLCs).

Which Types of Businesses Can Use Articles of Incorporation?

Filing articles of incorporation is the right option for corporations, which include C Corp, S Corp, B Corp. As discussed earlier in this article, LLCs do you file Articles of Incorporation, so they cannot use these legal documents. State governments use articles of incorporation to gather specific information when incorporating a business.

If you plan to set up a small business, consider opting for an S corporation, which pays taxes only on dividends. Large businesses usually form as a C corporation, which are required to have a board of directors and pay corporate taxes, but are also more attractive to investors. Learn more about S Corp vs. C Corp to make best decision or consult one of the business formation lawyers on our platform.

A certified B Corp is a for-profit corporation that has been recognized for their commitment to business practices that promote positive environmental and social change. They still require the filing of Articles of Incorporation.

How to Fill Out Articles of Incorporation

Once you have located the correct form to file with the state government, below are some simple steps to take in order to fill out the articles of incorporation form.

• Fill in the corporate name. Select the name of your corporation and include it in the articles. You may consider adding ‘Corp’ or ‘Inc’ on the end.
• Fill in the purpose of the corporation. The state government will want to know the reason the corporation is being formed, so include those in the articles.
• Designate a registered agent. The government will want to know and publish the registered agent. This is a party that will receive correspondence and legal documents on behalf of the company. Include their name and address.
• Include the number of authorized shares: Outline the total number of shares the corporation can issue. Par value and different classes of stock (if they exist) should also be included.
• Fill in the incorporator(s): Provide the name and contact information for the person or company who prepares and signs the Articles of Incorporation.

What to include or filing requirements may vary by state, so it is always a good idea to consult a business formation lawyer to make sure you have all the right information in the right place.

Where Can I Find the Articles of Incorporation Form?

The Articles of Incorporation form is normally found on the Secretary of State's website (or a similar agency) where they discuss business filings.

To find the Articles of Incorporation form for your state, you can use Google to search for your State's website for business filings and download the form there. Once you find the website, look for a section on business or corporate filings.

Alternatively, you can hire a corporate lawyer that provides business formation services to assist you in preparing and filing the Articles of Incorporation, as well as other documents needed. They can provide guidance on the specific requirements in your state and ensure that the form is filled out correctly.

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 a corporate lawyer's help forming a corporation, feel free to create a project posting on ContractsCounsel's platform.