Capturing the appropriate scope of law is crucial when starting a new business and picking a structure for it. A corporation’s first legal activity is creating it using a method called incorporation that will require them to submit a legal document called Articles of Incorporation. This submission brings into effect your corporation in a legal sense.
In this guide, we will describe the Articles of Incorporation in detail outlining their importance, what they constitute, and the steps required to a successful submission within the area of your preference.
What Are Articles of Incorporation?
Incorporation of business is associating a company to legally recognized corporate entity which provides them with certain legal benefits within the system.
Depending on the region, the Articles of Incorporation could alternatively be referred to as a Certificate of Incorporation and in cases called a Corporate Charter. They are documents recognized by the Secretary of State whose aim gives a company registration.
The purpose of this document is to outline some basic information concerning your corporation, such as name, objective, registered agent, and stock details. A corporation is formed as a state-registered legal entity or corporation, separate from its owners. A registered corporation can:
- Conduct business autonomously
- Own private assets
- Sue and be sued in its own name
- Owns and pays taxes distinct from its shareholders
- Enter contracts
The incorporated company articles will act as legal documentation of your corporation and will keep a record of it so all business activities undertaken by you become traceable later.
Examples of corporations that can be formed by filing these Articles include C-corporations, S-corporations, and Nonprofit Corporations, offering their respective share of advantages and disadvantages based on specific business objectives, goals for taxation, and strategy.
Why Is The Articles of Incorporation Necessary?
Articles of incorporation gives a legal personality to the business. Note this is only for registration and does not constitute other business licenses that may be required besides these articles for opening a company.
1. Creation of Legal Entity
By registering this document, the business is able to own property, sue, open a bank account and enter into legal contracts independent of the owners or shareholders of the business. After filing, the business is legally an entity with limited liability, separate from its owners or shareholders.
2. Liability Protection:
One benefit that stands atop the rest is limited liability, which comes into effect after incorporation. Post incorporation, a business legal debts and obligations will not have any impact on your personal wealth. This, in turn spares shareholders and directors from having to meet personally the corporation’s debts or sue, other than in instances of fraud or personal guarantees.
3. Credibility and Reputation:
Registered corporation instantly promotes the company, adding another layer of professionalism and credibility. A majority of vendors, clients and investors would rather partner with legally acknowledged entities. While bidding for contracts or seeking financing, it aids in perception and enhances appeal.
4. Capital Access:
The practice of selling shares permits corporations to obtain capital. This factor renders it easier for funding their expansion and for bringing in new investors. Upon incorporating, the company gains the ability to define their financial structure by filing Articles of Incorporation.
5. Advantages of Taxes:
A beneficial fiscal framework is available for some companies depending on their structure in form of corporate taxes. Companies are eligible to use spendable write-offs such as health insurance premium and profit reinvestment into the business at lower taxation rates.
What Information Is Included in Articles of Incorporation?
Unlike any other documents, all U.S. states have a common set of minimum requirements for Articles of Incorporation. As a minimum, the following features must be incorporated by each state:
1. Corporate Name
Choose a distinguishing name of your business that meets your state’s policies and it must be available for use in that state. The name of your corporation shall contain as a minimum one of the following: “Inc.”, “Corp.”, “ Incorporated”, or “Corporation”.
Do not forget to carry out a business name reservation search on your state’s Secretary of State’s website prior to submitting your incorporation papers.
2. Principal Office Address
This is the legal location of your business where your Corporation is registered, you are supposed to provide a street address and not a P.O. Box, and this is where all your mail will be sent and business conducted and not any other location.
3. Registered Agent
This is a natural person or a legal entity who is to act in the name of your LLC when dealing with the outside world. Registered agent will represent you in receiving essential documents that relate with your corporation e.g. service of process legal notice, and other legal government mail addressed to your corporation.
The agent you hire must be physically located within the state of registration of the corporation and must be reachable during business hours.
4. Business Purpose
Include a short description of the business Corporation’s activities for the purposes of identifying that Corporation. This description could be specific, for example, “to manufacture medical devices” or vague, for example: “to engage in any lawful business activity”.
5. Incorporator(s)
The incorporator can be described as the person or entity that prepares, signs, and submits the Articles of Incorporation. This may include the owner of the business, a lawyer, or an incorporation service that incorporates on behalf of the business owner.
6. Share Structure
You should specify the number of shares of stock that the corporation will be able to offer and their type (common, preferred, etc.). This information determines how ownership will be divided and is crucial to obtaining additional capital and structuring control and ownership.
7. Initial Directors (if required)
Some jurisdictions require the names and addresses of the initial directors of the corporation who will supervise the corporation until its first shareholders’ meeting is held.
8. Duration of Corporation
While most corporations are formed to exist perpetually, you can also indicate a set duration for your corporation if it is intended for a specific project.
How to File Articles of Incorporation: Step-by-Step
This step can lead to issues with proper business registration if not done correctly. Let’s break this down into easy to follow steps.
Step 1: Choose a State of Incorporation
Your home state or states like Delaware, Wyoming, or Nevada which are considered more favorable to businesses can be utilized depending on where you want to incorporate. Take into account:
- Your primary business location.
- State tax policies.
- Payment and submission calendar for required company documents.
Step 2: Pick a Unique Business Name
Make sure the business name:
- Is not already taken or too similar to an existing entity
- Complies with your state’s naming rules
- Includes a required corporate suffix like “Inc.” or “Corp.”
Obtain the Secretary of State’s online tool to reserve the business name during the checking process.
Step 3: Appoint a Registered Agent
A registered agent is a person or service who is appointed to oversee important legal documents. Bizstartz provides registered agent services. However, any business or individual residing in the 50 states can take advantage of these services.
Step 4: Draft the Articles of Incorporation
Prepare a template for your state’s form or simply download the official version. Incorporate all necessary information as mentioned above. Be accurate, since mistakes can lead to unwanted delays or denials.
Most states permit online filings, which offer improved speed and convenience over sending paper forms through the mail.
Step 5: Submit the Articles to the State
Submit your completed Articles of Incorporation to the relevant state office, usually the Secretary of State.
Filing methods include:
- Online through the Secretary of State’s website
- By mail
- In person, if applicable
Step 6: Make Payment for Filing Fees
Paying a fee is mandatory in all states and the fee can range anywhere from $50 to $500 or more, depending on the state and type of organization. Most states offer expedited processing for an additional fee.
What Happens After You File?
After the state approves your Articles of Incorporation, you will receive a Certificate of Incorporation or Filed Articles. However, the process does not stop there. To completely organize your corporation, you are required to do the following:
Establish Corporate Bylaws: Rules pertaining to the internal operation of a corporation, such as meeting protocols, decision-making processes, and duties assigned to officers and directors.
Conduct The Initial Board Meeting: Elect officers and directors, issue shares, adopt the corporate bylaws, and record everything in the meeting minutes.
Issue Stock Certificates: Allocate shares to the initial shareholders and document them in the stock ledger.
Register for an Employer Identification Number (EIN): This number is mandatory for taxpayers, and is used for filing tax returns, funding a business bank account, or hiring workers.
Open a Business Bank Account: Accounts designated for the company should be separate from personal accounts to ensure protection from personal liability.
Maintain Compliance: Fulfill ongoing obligations associated with filing an annual update report, franchise taxes, and other applicable state concerns.
Can I File Articles of Incorporation Myself?
Absolutely, if your business is straightforward and you are acquainted with the criteria your state has set, you can independently submit the Articles of Incorporation.
Regardless of the reason, some entrepreneurs prefer to work with professionals or Bizstartz incorporation services to:
- Avoid expensive mistakes in filing
- Make the most of their time
- Guarantee all legal aspects are adhered to
- Receive additional services like filing for an EIN, registered agent services, or compliance monitoring
Help is strongly suggested for international founders or individuals who are not familiar with American legal guidelines.
Final Thoughts
The Articles of Incorporation is one of the first documents that needs to be filed for a corporation in the US. Filing it accurately and on time gives a business the infrastructure required to build legal compliance, financial credibility, and growth prospects.
It is not that simple, but at least it is makeable if you know what is needed and with the right services like Bizstartz, makes it simpler.
In case you wish to incorporate a business, or need assistance with filing the Articles of Incorporation, no need to look further; with us you are guaranteed to file accurately and expeditiously in any state of the US. We strive to prepare all the necessary documents accurately while you focus on growing your business.
Need Help Incorporating?
Contact Bizstartz and start working on the Articles of Incorporation and build your business legally and strategically.
