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Articles of Incorporation has to be filed in the state before starting the business.

When a business owner decides to establish the business as a corporation, they need to file a registration document in the state where they intend to establish the business. This document is known as the Articles of Incorporation. It is also known as a Corporate Charter or Certificate of Incorporation in different states. 

Articles of Incorporation is one of the most important document to start a business.

What are Articles of Incorporation?

An important document for all businesses, Articles of Incorporation has to be filed in the state before starting the business. Every state has a fee for the filing of this document. A corporation is a legal entity formed to do business and Articles of Incorporation is essential to register the business with the state. This process will allow the state to receive taxes and ensure that the business adheres to the state laws. 

The Articles of Incorporation will be based on the type of corporation and some examples are:

  • Foreign Corporations,
  • Domestic Corporations,
  • Professional Corporation,
  • A Close Corporation,
  • Stock Corporation,
  • Public Benefit Corporation, 
  • A Nonprofit Corporation,
  • Non-stock Corporation.

Do all businesses need to file the document?

It is important to note that the Articles of Incorporation is only for corporations. Sole Proprietorships do not need to register with the state. There are certain types of limited partnerships that need to register with the state and LLCs need to use Articles of Organization to register the business with the state. Articles of Organization are similar to Articles of Incorporation. They have similar information. 

Importance of Articles of Incorporation 

The importance of the document is to provide basic information that is required to form a business and to establish a business in the state. It is important for the state to be informed about the identity of the business, the purpose of formation, and the people who will handle the business. 

Establishment of existence: The articles of incorporation help establish perpetual existence. It means that the corporation will continue to exist in the future even when the owners or executives exit or die. The corporation becomes permanent over any incorporated business which can be terminated by the withdrawal of some of the owners. 

Tax benefits: Incorporation of business in some states allows the firms to enjoy low tax rates on some operating costs. A few of these costs are employee wages, cost of production, retirement benefits, insurance costs, and investment made in green energy. A reduction in tax rate will help reduce the overall liability of tax. 

Protects from liabilities: After incorporation, the incorporated entity is different from the owners and it means that the owners remain protected from business liabilities. When the business owes money to creditors and is unable to pay, the creditors cannot auction the personal assets of the owners. When a business is an unincorporated entity, there is a risk of losing owners’ assets to pay business debts. 

Efficient corporate image: Running a business as a corporation will add trust and credibility to the company. Most customers trust the business with terms like Incorporated or Inc at the end of the brand name. It will also help win the trust of banks and investors. 

What is included in the Articles of Incorporation?

There are very specific requirements by state but the following details are generally included:

Name of the corporation: Most states need you to include the term Incorporated or Inc. to designate the business as a corporation. 

Details of the registered agent: You will have to name somebody who will receive important legal papers and documents on behalf of the business. The agent is an individual who is always available in business hours.

Type of corporation: It is important to mention the type of corporation you are forming. In a stock corporation, you will have to include details about the authority of the corporation for the issue of a certain number of shares of stock with details about the price of the shares. 

Purpose of formation: You will have to specify the purpose behind the formation of the corporation. Include details like the type of business it is in and the goods or services you sell. 

Name and address of the directors: The business will need to form a board of directors and they have to be mentioned in the document. 

Duration of the corporation: You need to mention whether the corporation is for a specific period of time or if it is perpetual. A lot of corporations are set up as perpetual organizations.

Details of the incorporator: The person in charge of the setting up of a corporation is known as an incorporator. An incorporator will file the Articles of Incorporation in the state where it is registering and filing all business documents needed until it is officially registered. Details of the incorporator need to be included in the document so that they can be contacted if needed. 

How do I file and find Articles of Incorporation?

One can file the Articles of Incorporation with the office of the Secretary of the State in the State where you want to establish and run the business. Filing the Articles of Incorporation is the first step towards the establishment of a business. 

If you want to find already filed articles, you simply need to go to the State authority’s website, and find an option called “Business Filings”. You can then search for the information using the name of the corporation. You can then download the Articles of Incorporation.

Key Takeaways

  • Articles of Incorporation has to be filed in the state before starting the business.
  • The purpose of the document is to provide basic information that is required to form a business in the state.
  • Articles of Incorporation is only for corporations. Sole Proprietorships do not need to register with the state.

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