ARTICLES OF INCORPORATION: Its Meaning, Example, and Importance

Articles Of Incorporation
Image Credit: The Incorporators

Articles of incorporation are the official documents that establish a business entity. They must be submitted to and approved by the appropriate government agency. It mostly includes details like the business’s name, address, agent for service of process, and the number and type of shares to be issued. The legal formation of a corporation requires the filing of articles of incorporation with the appropriate authorities.

Understanding Articles of Incorporation

A corporation is a common business structure in the United States and Canada; it is established in the state where it exists. By following the steps and making the right decisions, a business can become an official corporation and get the protections that come with it. To be legally recognized as a corporation, you must have received approval of your articles of incorporation. 

Articles of incorporation are legal documents that must be filed in order to make a corporation official in the place where the filing takes place. The corporation will then be subject to the corporate laws of that place.

Anyone who is interested in learning more about a company’s history and structure can review the articles of incorporation, which are open documents. The articles of incorporation a company submits vary by location and business structure. For example, the articles of incorporation that a company files if it wants to operate as an LLC may be different from those that a corporation files if it wants to use either the C or S tax status. Articles of incorporation are important because they legally show the government that your business is operating legally in your state.

Articles of Incorporation Document Requirements

Generally, the requirements for the articles of incorporation vary from state to state. However, the following are what you’ll find across every state;

  • Business Name
  • Location and contact information for the registered agent
  • Type of corporate structure (e.g., profit corporation, nonprofit corporation, non-stock corporation, professional corporation, etc.)
  • Board of Directors Contact Information
  • Number and type of authorized shares
  • Duration of the corporation, if it wasn’t established to exist perpetually
  • The incorporator’s (the person responsible for forming the corporation’s) name, signature, and address.

Why Is Articles of Incorporation Important?

Articles of incorporation are important because they legally show the government that your business is operating legally in your state.

Other importance of the Articles of Incorporation includes; 

#1. Reduces Liability

If a business is set up as a legal corporation, its owners are less likely to have to pay for its debts out of their own pockets.

#2. Tax Advantage

Generally, tax rates are lower for businesses that are incorporated than for businesses that are run by a single person.

#3. Official Establishment

Articles of incorporation are needed for a corporation to be recognized as a legal entity that can work on its own.

#4. Allows The Issuance Of Stocks

Another great importance of incorporation is that it allows the issuance of stock, which facilitates both brand awareness and fund-raising.

Who Needs Articles Of Incorporation?

Just about anyone who wants to structure their business as a corporation needs the articles of incorporation. This may include personal corporations, non-profit corporations, and so on.

Is Articles Of Incorporation the Same as EIN?

No. EIN is the acronym for Employer Identification Number. Generally, it is for employers who intend to hire employees. For tax purposes, the IRS will give your company a nine-digit number called an “Employer Identification Number” (EIN) that is unique to your company. It’s essential for things like making payroll and filing taxes. Obtaining an EIN from the state is necessary for filing state income taxes. The articles of incorporation, on the other hand, are a series of documents filed with a government entity to legally establish a corporation’s creation. They are also known as a certification of formation or a charter.

Which Is Better Incorporation Or LLC?

It technically depends on the business owners and how they intend to operate. LLCs are popular with small, owner-run businesses that want to be flexible rather than have a rigid structure. A corporation is the best way for a business to be set up legally if it wants to get money from investors.

Can You Write Your Own Articles of Incorporation?

It depends on the state you’ll be incorporating the business. There are states that require businesses to use the state’s articles of Incorporation form. While a few other states also allow businesses to draw it up themselves. 

How To File For Articles Of Incorporation

If you are yet to incorporate your business and are wondering the best ways to file your articles of incorporation, then this is for you. It’s possible that the process and documents needed will be different depending on where the business will be located. The following are step-by-step guidelines for doing so.

#1. Choose a Name for Your Business

Of course, you don’t need anyone to remind you of this. Every business is unique, and the difference in names is one of the many things that make businesses unique. Before you file articles of incorporation, make sure that your company’s name is unique and not too similar to that of another company. You can check the name you’ve chosen for your business against the state’s online name reservation database to make sure it is truly unique. To further denote that your enterprise is a corporation, you should add “corp” or “inc.” to the end of your chosen name.

#2. Gather and Arrange Information

Gathering the necessary data is important to fill out your incorporation form. The names and (if they have them) social security numbers of the company’s directors, shareholders, registered agents, and any other important people. You could also specify the maximum number and type of shares your company will issue.

#3. Appoint a Registered Agent

A registered agent is a person or business that agrees to be the point of contact for all legal notices and documents sent to the corporation. One of the things you should verify when choosing an agent is that the agent designated as the registered one must be reachable during normal business hours every day of the year.

#4. Compile the Vital Data

There are certain key pieces of information that must appear on a business’s articles of incorporation. To ensure that none of these are missing, it’s always important to arrange them ahead of time. The following are some of these vital data 

  • The name and address of the corporation, 
  • The name and address of the registered agent, the business’s purpose, 
  • The names of all agents and board members
  • The number and class of shares authorized
  • The name of the incorporator

#5. Filing With Your State Agency 

You can send articles of incorporation to the Secretary of State via mail or the internet. The cost of filing your articles of incorporation can vary with the method you select.

#6. Follow-up 

Once your company’s articles of incorporation have been authorized, they will be sent to the address listed there. The decision to make it public largely depends on the state. There are states that require businesses to make their data public, while others do not. You should also make bylaws and an operating agreement to protect the people who own shares in your company from legal trouble. 

#7. Apply For EIN

To finish registering your business with the Internal Revenue Service (IRS), you must also apply for a Federal Employer Identification Number (FEIN). 

Alternatively, you can

#1. Fill Out the Form Online or in Person.

You can either go to the office of the secretary of state in your state that is in charge of issuing business paperwork or you can fill out the form online and then print it out. 

#2. Review the Articles and Sign

Next, review all the information in your articles of incorporation form. You might check for typos, spelling errors, or incorrect information. Additionally, if you’re an acting incorporator, such as someone who files in person, you can sign your name as your state requires. In the same way, if your state needs it, the registered agent can sign the article form. Ensure to make any necessary document revisions during this step.

#3. Register With the State

Once the form is filled out, you can send it to the right people. Before you do, though, make sure that all signatures and reviews have been done.

#4. Make Copies and Distribute

Making copies of this certification is important because you’ll need it at different intervals. 

The articles of incorporation should be kept by each person who starts a business, by the registered agent, and by each director and officer of the business.

What Are the 3 Types of Incorporation?

The three most common types of incorporation are as follows;

#1.. Limited Liability Company (LLC) 

LLCs are a type of business entity that has limited liability and is taxed as if it were a pass-through. An LLC, like a corporation, is considered a distinct legal entity from its members. So, it is rare for business owners to be held personally responsible for the debts and liabilities of the business. 

#2. S Corporations (S corps)

S-Corps are usually small businesses. They get the benefits of being a corporation and the fact that they don’t have to pay taxes. You can pass income directly to shareholders, just like with an LLC, without having to pay federal corporate taxes. There are a few things that S corps can’t do:

  • Only one type of stock can be issued
  • Are only available to shareholders who are US citizens or residents, certain trusts and estates, or tax-exempt organizations.
  • There can only be 100 shareholders

#3. C Corporations (C-corps) 

This is ideal for businesses that need investors. C-Corp is a completely separate legal entity that has to pay taxes and put out an annual report. A good number of new businesses start out as C-Corp. Generally, C corp businesses must pick a group of people to run the business. The C-corp should be set up as soon as possible in the life of your business.

California Articles of Incorporation

Articles of Incorporation Instructions

#1. Corporate Name

According to incorporation, a proposed business name is the number one reason a business application is turned down. This is because there are rules about what a California corporation can be called and failing to abide by these rules will only mean that your articles of incorporation application will be turned down

Some of these rules are s follows

#1. Business Name

In California, you cannot register a name that another company is already using. To ensure you aren’t a victim of this, kindly do a business entity name search to see if the name is already taken.

  • Use Of Certain Terms: In California, there are certain words that you must not add to your business name. This includes bank, trust, trustee, or anything similar in the name of your business.
  • Must-Have: You must have one of the words corporation, incorporation, limited, or an abbreviation of one of these words in your name.

#2. Purpose Of Corporation

Corporate purpose says that your California company is being set up to do business legally.

#3. Service of Process

State law in California says that every business must have a California registered agent. The registered agent will be in charge of getting legal mail and certain tax documents on your company’s behalf.

Again, if your application must be approved, it must include the street address of your registered agent.

#4. Corporate Address

You are required to list a California business address, even if you’re a web-based business. If you hire us, we’ll provide a California business address for you to use on your Articles of Incorporation at no extra cost.

#5. Pertaining Shares

When you incorporate, you have to tell the Secretary of State how many shares of stock you want to give out. However, businesses can always authorize and issue more stock later; there’s no cause for alarm.

#6. Incorporator

The name of the incorporator must also be part of your California articles of incorporation. The incorporator is the person or company that makes your articles of incorporation and sends them to the government. If you do this on your own, you need to print this page and sign it. 

How to Submit California Articles of Incorporation

Anyone who wants to submit their application can send information to the Secretary of State online, by mail, or in person. According to californiaregisteredagent, the filing is free until June 2023, when it will cost $100.

If you will be mailing your application, below is the mailing address:

California Secretary of State

Business Entities Filings

PO Box 944228

Sacramento, CA 94244-2280

If you want to submit the application in person, you can check out the address below;

Secretary of State

1500 11th Street

Sacramento, CA 95814

Processing your application can take weeks, but you can avoid this by paying to speed up the process.

This can be done in three different ways, and they all cost different prices. 

  • 24-Hour: $350
  • 4-Hour: $500
  • Same Day: $750

What Is the Difference Between an LLC and Articles of Incorporation?

Companies that want to form a corporation use articles of incorporation, while limited liability companies use articles of organization (LLCs). Other major differences are as follows;

#1. Ownership

Owners of corporations are referred to as “shareholders,” and they are given ownership stakes in the form of stock.

In terms of an LLC, owners are called members, and rather than holding individual shares, they hold “membership interests” in the company.

#2. Transfer Of Ownership

It is easy to transfer ownership with the corporation

Transferring LLC ownership is more difficult than transferring ownership of a corporation.

#3. Taxation

Corporations are taxed twice because their dividends are taxed even after the company has been taxed.

There are two possible methods of taxing corporations. Generally, they are subject to the same tax regulations as C corporations. Each year, businesses report their earnings to the IRS and fork over a chunk of that cash in the form of corporate income tax and dividend payments.

The taxation of LLCs is significantly more lenient. A single-member limited liability company (LLC) is taxed in the same way as a sole proprietorship, whereas a multi-member LLC is taxed in the same way as a partnership. For tax purposes, this means that LLC members must include their share of firm profits in their individual tax returns.

#4. Management

In a corporation, the board of directors is responsible for making strategic decisions and ensuring the company runs smoothly.

The officials of a corporation are responsible for overseeing its daily operations.

Management structures within an LLC are intended to be more adaptable. The members of an LLC, or some other group, may act as managers.


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