Writing and Filing the Articles of Incorporation
By Jade Yeban, J.D. | Legally reviewed by Aviana Cooper, Esq. | Last reviewed May 23, 2024
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Starting a small business is an exciting venture for entrepreneurs. One critical step in setting up a new business is deciding on the business structure. Many business owners choose to form a corporation for liability protection, among other benefits. At the heart of this decision is the articles of incorporation, a document that formally establishes a business as a legal entity.
Your articles of incorporation act as a charter. It establishes the existence of your corporation in your state. It sets forth certain basic information about the new business. It describes the fundamental identifying and operating characteristics of your corporation. Once filed and approved by the state, the articles legally create the corporation as a registered business entity.
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What Do the Articles of Incorporation Include?
The Articles of Incorporation is sometimes called a corporate charter. They are critical documents for startups wishing to become a corporation. The articles of incorporation must, at least, include the following information:
- Your new corporation's name and address (principal place of business) should be listed.
- The corporate purpose is usually stated in broad language such as "to engage in any lawful activity." This helps avoid limiting the corporation's business prospects
- The name and address of your corporation's registered agent, the person who may accept delivery of legal documents on behalf of the corporation, is an important inclusion.
- Stock information, including the number of shares the corporation can issue, must be included. Information might also include the designation of classes of shares and the value of each share.
The articles of incorporation will usually identify the incorporators of the corporation. These individuals start the incorporation process. They are often responsible for signing the articles of incorporation before filing with the state.
Writing the Articles of Incorporation
While you can prepare the articles of incorporation yourself, you might wish to consult an experienced business attorney for help. Either way, your business's articles do not need to be complex or extensive. The articles simply must comply with the laws of your state. You don't necessarily have to create the articles completely from scratch. Most states' secretary of state websites contain pre-printed articles of incorporation forms. Your business can use these to complete incorporation in a short amount of time.
When drafting the articles of incorporation, entrepreneurs should be thorough. The business name should be unique and may need a DBA (Doing Business As) name if the name differs from the owner's. Every corporation, whether it is a C corporation (C corp) or nonprofit, needs to clearly state its business purpose. Details about shares of stock, the board of directors, and any bylaws should be clearly outlined.
Articles of Incorporation: Filing and Fees
After drafting, these articles must be submitted to the state government. Each state has its filing fees, so small business owners should budget accordingly. The filing fee ranges anywhere from $20 to $300, depending on the state of incorporation.
In some states, the filing fee varies if the new corporation is a non-profit rather than a traditional (for-profit) corporation. For example, in California, the fee for filing articles of incorporation for a general stock corporation is $100. The filing fee for a non-profit's articles of incorporation is $30.
Once the articles are written and signed, they are ready for filing with your state's secretary of state office. Once accepted, the business becomes a legal entity. Your state might make it official with a certificate of incorporation. It can now receive a business license, open a bank account, and even apply for a business loan. Regularly, the company may also need to submit an annual report to remain compliant.
What Happens After the Articles Are Filed
Once you've successfully filed your articles of incorporation, your journey as a business owner is just beginning. There are several crucial steps to follow to ensure the smooth operation of your business. These rules also help ensure its compliance with various legal and tax obligations.
- Get an employer identification number (EIN) from the IRS. An EIN, sometimes called a tax ID, is essential for tax purposes. Think of it as a social security number for your business. You'll need this when filing taxes, opening a bank account, and handling employee payroll.
- Develop a comprehensive business plan. A business plan outlines your business's goals and strategies to achieve them. Regardless of the type of corporation you run, a well-structured plan provides direction. It can be essential when seeking financing or investors.
- Protect your personal assets. Now that your business is a separate legal entity, it's crucial to keep your business and personal assets separate. Open a dedicated business bank account. Ensure all business transactions occur through this account.
- Stay informed on IRS guidelines. Different types of businesses have different tax obligations. Make sure you understand the tax guidelines for your type of business. This will be different whether your business is a nonprofit corporation, foreign corporation, or a professional corporation, for example.
Need Help Writing and Filing Your Articles of Incorporation? Contact an Attorney
Writing and filing your new corporation's articles of incorporation is a key step on your business's path to success. Whether dealing with a state agency or perfecting an operating agreement, you should consider contacting an experienced business attorney to ensure that your new business complies with your state's legal requirements at all steps in the incorporation process.
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