Articles of Incorporation
Articles of Incorporation are essential legal documents companies must file to start a corporation officially. Filing Articles of Incorporation is the first step to creating a new company. They contain vital details about the company and result in the government approving its creation.
What Articles of Incorporation contain
Articles of Incorporation include essential information about a new company:
Business details
The Articles describe the company’s business plan and its purpose and activities.
Founders
The names and addresses of the people starting the company are listed. These people are called the incorporators.
Directors
The names of the people who will serve on the company’s Board of Directors are included. The Board of Directors oversees the company’s major decisions.
Capital structure
The Articles explain how ownership of the company will be divided. They state the number and types of stock shares that will be issued, outline who will own the company, and more.
Registered Agent
The Articles name a registered agent and registered office for the company. The registered agent is designated to receive legal notices on behalf of the company.
Why Articles of Incorporation are important
Filing Articles of Incorporation has several significant effects:
Legal Existence
Once the Articles are filed and approved, the company legally exists as its entity, separate from the founders. The company can now conduct business.
Limited liability
Incorporating protects the founders’ assets. The company, not the founders, is liable for its debts and obligations.
Ownership
The Articles define the company’s ownership structure through its stock. Founders and investors can now own shares of the company.
Credibility
Incorporated makes a company seem more credible and legitimate to customers, vendors, and partners. It shows the company is a “real” business.
How to file Articles of Incorporation
The process to file Articles of Incorporation is:
Choose a state
Companies incorporated in a specific state. Many choose to include it in their home or business-friendly states like Delaware.
Get an EIN
Before filing, the company needs to get an Employer Identification Number (EIN) from the IRS. The EIN is like the company’s SSN.
Fill out the form
Each state requires a form for the Articles of Incorporation, which asks for essential information about the company.
File and pay the fee.
The completed Articles must be filed with the state’s business filing agency, usually the Secretary of State. Each state charges a filing fee.
Wait for approval
After filing, the state reviews the Articles. If approved, the state issues a certificate of incorporation. This officially creates the company.
Wrap-Up
Preparing and filing Articles of Incorporation is critical in starting a new company. The Articles declare the company’s purpose, ownership, and leadership. They allow the company to come into legal existence. While the specific information varies by state, all Articles of Incorporation are essential in establishing the company as a legal entity poised to conduct business.
