When creating a corporation, you need to get all the legal paperwork in order. This depends in part on your corporate structure and the type of organization you intend to create.
Your articles of incorporation (also called the corporate charter) play a key role, as you’re required to file them with your state at the time of incorporation.
What are Articles of Incorporation?
Articles of incorporation are a set of formal documents used to signal the creation of a corporation. These documents are filed with the secretary of the state. Broadly, articles of incorporation contain the firm’s name, the purpose of the corporation, and the process for electing a board of directors.
Corporations are incorporated in a specific state in the U.S. This doesn’t mean they can’t operate in other states, although the other states will require separate registration.
The articles of incorporation should include the corporation’s:
- Name and address of the registered agent
- Type of corporation, such as nonprofit, professional, etc.
- Names and addresses of the initial board of directors
- The number and type of any authorized shares
- Duration, which can be perpetual
- Name, signature, and address of the incorporator
Most states also require a statement of purpose, but this can be broad. It can go as far as to say “anything a corporation can do legally,” or it can be used as part of your own definition of your company’s purpose. However, if you make it too narrow you may have to amend it later.
Why are Articles of Incorporation Important?
Articles of incorporation are a legal requirement. They establish the corporation as a legal entity. This means:
- Stock in the corporation can be sold.
- The corporation pays corporate tax rates, which are often more favorable when compared to the personal rates paid by “pass-through” entities, such as sole proprietorships or S Corporations.
- Owners and directors gain protection from personal liability if anything happens with the company.
Ultimately, establishing a corporation helps a business grow, protects the owners, and offers tax benefits in many states. Not doing so may result in significant personal liability. You also need to file articles for every subsidiary company you form.
How to File Articles of Incorporation
Articles of incorporation are filed with the Secretary of State’s office in the state where you form the business. This should normally be the state where you intend to operate. Companies that do business entirely online may find it advantageous to file in a more business-friendly state.
Most states have a form to fill, which ensures that you put in all the required information. Exact requirements vary from state to state, so it’s important to check with your state. Filing fees also vary from state to state, but typically range from $100 to $250. You may also have to pay other fees with different government agencies.
You’ll usually receive a Certificate of Incorporation in return with an approval stamp on it.
Articles of Incorporation Example
As mentioned, requirements vary state by state, and are more onerous in some states than others. This free template can help you put them together quickly. You can also hire a professional to help you, which might be handy if you and your board are busy with other tasks related to setting up the business.
If you do use a template, make sure it meets the requirements of your state. Most are similar, but there are some outliers. For example, Nebraska requires a purpose, but doesn’t require you to list the board of directors.
Once you file your articles, you’ve taken a major step toward forming a corporation, although there are other legalities that also need to be handled, such as getting an employer identification number (EIN).
Master Board Meeting Preparation With OnBoard
Before you can file articles of incorporation in most states, you need to form your corporate board. OnBoard provides an intuitive meeting management software platform to help you run board meetings smoothly and effectively. By automating manual tasks, you’ll gain extra time to put together articles of incorporation and other legal documents quickly, so you can get on with the real work of running your business.
OnBoard’s platform integrates with Zoom for video calls and Microsoft-native files, provides a secure messenger service for encrypted and private conversations, allows you to offer board evaluation surveys, and enables you to store key documents in a secure repository.
And if you’re ready to plan your first board meeting, or simply want to streamline meeting management at your organization, download our free board meeting agenda template.
Frequently Asked Questions (FAQ)
What is the Purpose of Articles of Incorporation?
Articles of incorporation are how your company becomes a corporation. They establish you as a legal entity in the state where you conduct business and provide basic information about your company to regulators.
What Should be Included in Articles of Incorporation?
States vary in their requirements, but typically you’ll need to provide the company's name, the name and address of your registered agent, the type of corporate structure, the names and addresses of your initial board, the number and type of shares, the duration if not perpetual, the purpose of the company, and the name, signature, and address of the incorporator. The latter can be someone you hire to help with the paperwork.
What Are the Differences Between Articles of Incorporation and Articles of Association?
The articles of incorporation are the documents you file to create a legal entity. They’re intended for external purposes. In contrast, the articles of association specify your internal rules and regulations and define your purpose and mission. These are intended for internal use and include the standard methodology for day-to-day operations. Another similar document is the operating agreement, which is a contract members of an LLC agree on for handling disputes.
About The Author
- Josh Palmer serves as OnBoard's Head of Content. An experienced content creator, his previous roles have spanned numerous industries including B2C and B2B home improvement, healthcare, and software-as-a-service (SaaS). An Indianapolis native and graduate of Indiana University, Palmer currently resides in Fishers, Ind.
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