The legal outcome of seeding the roots of your own company can be complicated. Still, it’s a major step towards a brighter future. Idealizing the concept of the company is not only difficult, but it comes with specific and numerous legal paperwork and formalities.
So, if you wish to establish a corporation business formation, you need to go through some procedures. The major one is the articles of incorporation, which you must file to create your company’s separate legal identity.
FastCorpUSA makes it easier for you to prepare the articles of incorporation along with the details of filing them down.
What Are Articles of Incorporation?
When you are establishing a corporation, whether C-Corp or S-Corp, the articles of incorporation must be filed. These are the formal documents that are filed within the government body. Every state has its own demand for information regarding the business, as some require more and some only demand basic information.
However, all states need a state-wide registered agent. At the same time, the corporation’s actual existence starts with the filing of articles by the state itself.
For your easy understanding, the articles of incorporation are a kind of contract. This contract lies between the corporation, the state, and the shareholders in the corporation.
Let’s overview how these documents work when you start a business with the right path.
Documents Required for Articles of Incorporation
The articles of incorporation are required to be filed by every corporation for legal identity. In contrast, each state requires different documents and details while filing the documents. FastCorpUSA has lined up the checklist for you that you should check while filing the articles of incorporation.
- Corporation’s Name and address
- Identity (name) and address of the in-state agent
- Type and number of the authorised shares in the company and per value (if any) of shares
- Name, Address, and signatures of incorporators.
Some states require more information while filing the articles of incorporation, which we have also gathered.
- Corporate structure type, whether profit, nonprofit, professional, or non-stock corporation, is filed.
- Identity (name) and address of board directors
- The corporation’s duration, if not perpetual
Customisation of Articles of Incorporation
Although the company has the choice to describe its purpose extremely broadly to ensure operational flexibility. However, the majority of governments also require the company’s purpose to be stated in the articles.
Additional clauses that may be included in a company’s articles of incorporation cover concerns such as
- the directors’ responsibility limitations
- shareholder actions that are taken outside of meetings
- power to summon special shareholder meetings.
Every state includes required clauses that need to be included in the articles of incorporation. Also, the optional clauses that the business may choose to add should be given the choice to be added.
Tip: In order to conduct business in a particular state, international corporate entities must apply for a certificate of authentication, whereas domestic corporations will submit an article of incorporation.
Purpose of Articles of Incorporation
To show the ownership of your company within the state, you need the legal documents that are authorised by your state. The articles of incorporation exactly, serve as the legal document that contains the pertinent information about the corporation. This document proves that the company is registered in your state.
The articles include obligatory clauses that require the corporation to submit to the state government all basic information about the company. They may also include optional clauses that allow the corporation to opt out of certain default norms in the corporation legislation.
How To Write Articles of Incorporation?
Filing this document is like an online form. You will find the published templates of articles of incorporation on the website of the Secretary of State website in the U.S. The articles of incorporation template is designed according to the business type.
But all the templates have the same basic requirements you need to fill in about your company. All you need to do is to fill that template, wherever you can add further information too.
Also, you will need a business lawyer who makes sure that you are not lacking any information. Moreover, he will ensure that you do not add any excess information while meeting the state’s requirements. Let’s head to the step-by-step guide on creating the articles of incorporation.
1- State’s Name
Mention the state where the corporation is going to be incorporated.
2- Filer Details
State the details of the person filing the articles of incorporation. It must include name, address, city, state, zip code, and contact number.
3- Corporation Duration
Mention the name, duration, and purpose of the corporation.
The name of the corporation must comply with the country’s legal requirements, whereas the stated purpose must be clear. The duration must be stated perpetual if you don’t know how long-lasting your corporation will be.
4- Registered Agent Details
Similarly, like the filer details, the registered agent’s details will be entered in the articles of incorporation. The name, address, contact number, state, and zip code must be mentioned in the document.
5- Incorporator’s Details
The person who creates and organises the corporation is the incorporator. There can be multiple incorporators in a corporation, and details of one of them will be entered into the article of incorporation.
6- Initial Directors Details (if any)
It’s not necessary to provide the information related to the initial directors. However, to complete the requirements of documents, it’s good to enter the initial director’s information in the documents.
7- Share and Stock Details
This is an important aspect in articles of incorporation, as you need to file a few important details related to shares and stock classes.
- Number of shares that the company is permitted to issue.
- Number of share classes that the company offers.
- Total number of shares in each class.
- Detail of share per value when purchased from the company.
- Share class voting right numbers.
- What is the predetermined rate of redemption for each class of shares?
- If a share class’s dividends are constant.
8- Management Details
In this section, all the details related to the corporation meetings, voting, and other provisions will be mentioned.
How To File Articles of Incorporation?
As you know, what is the purpose of articles of incorporation and how to create them, FastCorpUSA now presents you with a guide on how you can file the articles of incorporation.
The incorporator of the corporation can only file the articles of incorporation. The incorporator, even if the company is not physically based in the state, may deliver the paperwork seamlessly. So, he can file documents in person, by email, or online to any U.S. Secretary of State of their choice, based on the state they selected for incorporation.
Larger companies may decide to establish corporations in states where they aren’t physically located. Since the corporate tax and privacy legislation in incorporating the corporation differ between regions. Your company will lawfully become a corporation when the department approves the articles of incorporation of the state’s office.
Where to File Articles of Incorporation?
Articles of incorporation must be filed with the Office of the Secretary of State in the territory where the corporation wishes to be incorporated in the United States. Some states have more favourable administrative and tax regimes, attracting a bigger share of enterprises filing incorporation.
In the U.S., Delaware and Nevada draw over half of the publicly held corporations because of their state rules that guarantee the corporations and provide them with all the legal facilities. The articles, when constituted, become publicly accessible and contain important details about the company.
Regardless of whether the corporation runs in the state or not, several states impose filing fees on companies that decide to incorporate therein. When a company is running in one state and simultaneously located physically in another state, then the firm must register in that state as well. In this registration, the corporation has to pay the filing fees and taxes.
Articles of Incorporation Filing Fees
State-by-state variations also exist for the filing fees of articles of incorporation, which typically range from $50 (e.g., Arkansas) to $300 (e.g., Massachusetts). Other charges are also added and need to be paid at the time of filing.
Once you have completed all the necessary paperwork and paid the fees, the secretary of state’s office will check the documents to make sure all the data is correct, and the legal name isn’t previously in use. If everything is in order, the state uploads the documents, converting the company into a legal entity.
When Can I Use Articles of Incorporation?
The purpose of the articles of incorporation is to establish the business as a distinct legal entity and to keep the proprietorship apart from it. By making the company both legally and monetarily liable for its debts, incorporation lowers the potential harm of any business owner facing legal action.
Any kind of company may file the articles of incorporation. A company may be formed as just one person’s business at first, or it may subsequently transform into a corporation. While larger corporations frequently become C-corporations and spend corporate fees, where they are required to have an advisory board of directors in order to function.
However, the smaller companies usually become S-corporations, which pay taxation only on profits.
Articles of Incorporation vs. Other Documents
Once articles of incorporation are filed, the secretary of the state’s office reviews all the provided details and their authenticity to make the company go legal. Meanwhile, let’s discuss the comparison between the articles of incorporation to the other legal documents.
Articles of Incorporation vs. Bylaws
The bylaws are a corporation’s more useful operational tool than its articles of incorporation, which are submitted publically. Bylaws define the internal operations and organization of the corporation.
The rules and processes for managing a business are outlined in its bylaws documentation. Although many jurisdictions require a corporation to legally memorialize the bylaws, certain states do not need a business to keep bylaws.
Articles of Incorporation vs. LLC Operating Agreement
Business agreements are specific to Limited Liability Companies (LLCs), although articles of incorporation are necessary government filings for the formation of corporations. Furthermore, the company’s structure of data is delineated in the incorporation papers.
Conversely, operational agreements frequently include the rules for resolving disagreements amongst members or stakeholders. Compared to the articles of incorporation, an LLC’s operating contract serves as a more personal protective pact.
Articles of Incorporation vs. Business License
Operating in a certain sector or jurisdiction is generally permitted for businesses with a business license. It allows its holder the authority to establish and operate an entity within the designated territory. The Articles of Incorporation are the highest regulating document for a company and just serve to officially create the organization; in contrast, the powers provided by a business license are frequently more specialized and detailed.
Articles of Incorporation vs. Business Plan
An official operational plan of a firm is communicated through a confidential document called a business plan, which may be discussed with significant clients, investors, or shareholders.
A company plan, which is frequently an organizational document, is primarily utilized by management within the company as a decision-making pathway. The articles of incorporation, on the other hand, are purely informational and non-strategic legal obligations.
Importance of Articles of Incorporation
When submitting its articles of incorporation, the company should proceed with caution since these establishment documents are very important. First off, in order to form a new corporation or firm, they must do it lawfully. All paperwork must be registered before the corporation may be formed and approved by the state as a legitimate business organization.
When a company is formed, it generally has a stronger potential to obtain cash through stock permits. Before incorporating through the completion of its articles of incorporation, a business is not permitted to sell shares. Additionally, corporations could be treated more favorably by the tax code than individuals or private taxpayers.
These are also personal responsibility issues to consider while forming a company. Before a company is formed, people are frequently held accountable for its debts. Entrepreneurs might potentially avoid personal accountability for their company’s obligations by creating a formal corporation. Only once the articles of incorporation are properly filed can this obligation protection take effect.
The Bottom Line
A new corporation must be formed and registered with the municipality using the articles of incorporation. This agreement establishes the company as an independent juridical entity and authorizes the shareholders of the business to lawfully administer the organization.
After filling out this short form, which takes only a few minutes, the company’s public profile on the government’s website will be based on it.
If you still face any issues and have queries related to incorporating your corporation in the choice of your state, FastCorpUSA’s specialists are a call away. Contact us or mail us at email@example.com for any assistance.