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What Are Articles of Incorporation (and How to Use Them)

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Have you thought of a great business plan and are ready to get things moving? Well, officially launching your business requires a lot of paperwork as you need to choose how you want your company to be structured. There are many different company structures, from C-corporations and S-corporations to sole proprietorships and limited liability companies. The first step is filing your articles of incorporation, as this certification is usually required to get your new company underway. So, let’s get started.

Articles of Incorporation Explained

As someone interested in opening a small business, you’ve likely heard of the certificate of incorporation or corporate charter. If so, these terms also refer to articles of incorporation. Articles of incorporation is a legal document that you are required to file with your state to establish a C-corp or S-corp. You will be required to provide a variety of basic business information, and upon approval, your corporation will be legally established. However, there are other company structures you as a small business owner can consider, like a sole proprietorship or limited liability company. It’s essential to explore and learn about all available company structures so that you can make the best choice for your company.

Once you’ve decided how you want your small business to be structured, it’s time to choose a name. Articles of incorporation cannot be filed without a name being selected for your business. However, there are stipulations about how your company’s name can appear, like matching or being similar to a competitor and including a corporate identifier. Many states have online databases open to the public, so you can see what business names are taken and reserve a name while filing your articles of incorporation.

As you move through filing your articles of incorporation, you’ll be required to select a registered agent to represent your company. This individual will receive legal and financial documents regarding your company on your behalf, so important documents aren’t lost, and lawsuits aren’t evaded. Having a business lawyer can be helpful as this individual can act as your registered agent. However, the individual you choose must have a physical address in the state of filing and have access to physical mail during regular business hours.

Required Information Overview

The guidelines for articles of incorporation vary depending on the state you’re looking to file in. However, most of the requirements are similar. We’ve created a brief overview of the information that’s usually required for your forms so that the filing process can go smoothly for you:

  • Name: Your company’s legal name will be listed ending in a corporate identifier like “Corp.” or “Inc.”
  • Address: Your company’s principal operating address will be listed, which identifies the state in which you are filing.
  • Appointed registered agent: Your company’s official documents must be sent to a registered agent or company on your business’s behalf.
  • Purpose of business: Depending on the state you’re filing in, you may be required to have a general statement that authorizes your business to engage in any lawful purpose. However, some states require a more detailed description of offered products or services.
  • Directors and officers: Identifying directors and officers early on is essential as your state may require you to provide these individuals’ names and addresses since they play a significant role in overall daily business operations.
  • Number of shares: You’ll be required to specify the number of shares your business has issued, which varies from C-corps and S-corps. However, many companies don’t issue all shares as unissued shares can be used for expansion and additional shareholders.
  • Class of shares: Your stock class will vary on whether your company is a C-corp or S-corp, but a determination between common or preferred classes of shares will be required.
  • Selected incorporator: Your incorporator is the individual or legal service that fills out and files the article of incorporation forms for your company.

 

Filing Your Articles of Incorporation

You have a variety of options regarding how you file your articles of incorporation, such as through the secretary of state’s office, a legal help website, or with a lawyer’s assistance. It’s essential to consider your unique needs and preferences when choosing how to file, as each option has advantages and disadvantages. Once all necessary paperwork is filed, your state will officially register your company’s name, and you’ll receive a formal certificate of incorporation by mail. Many small business owners choose to incorporate a company in the state where the brick-and-mortar store is located, but you can decide what is easiest for you. Below are a few details we encourage you to consider when determining where your business will be incorporated:

  • Formation fees
  • Annual fees and filings
  • Corporate and franchise taxes
  • Legal system
  • Investor preferences

Maintaining Your Corporation’s Status

While filing for incorporation is a time-consuming process, your to-do list doesn’t stop once you’ve successfully filed. There are many other tasks you’ll be required to complete to operate and maintain your corporation legally, such as:

  1. File an initial report. Depending on the state you’re filing in, you may be required to file an initial report within one to two months of establishing your incorporation. While it may seem like a repetitive process, the initial report provides updated information to the state, such as registered agent, location, directors, officers, and more.
  2. Publish a notice. You’ll likely be required to publish a notice announcing your new incorporation in a local newspaper. Keep in mind; your notification must include your company’s name, address, number of shares, and other pertinent information from your original forms.
  3. Submit your annual report. After establishing your incorporation, it’s mandatory to submit yearly reports as these include financial data like profit and loss statements for the public and potential shareholders.
  4. Learn and follow corporate bylaws. You must become familiar with corporate bylaws as these will help you run your corporation correctly and learn the rights and responsibilities of all involved parties.
  5. Schedule a board of director’s meeting. Your first board of director’s meeting will be held after incorporating, and all minutes and resolutions should be documented in full.
  6. Schedule a shareholder meeting. Like the board of director’s meeting, you will also be required to hold a shareholder meeting where stock shares will be issued and recorded.
  7. If applicable, elect S-corp status. After incorporating, you can determine whether you want to elect C-corp or S-corp status after considering your company’s unique needs. If electing an S-corp status, Form 2553 can be filed with the IRS.
  8. Adequately manage administrative matters. Upon incorporating, you will be required to uphold required local business licenses, open a business bank account, and apply for an employer identification number. It’s also essential that you prioritize determining your filing state’s corporate and franchise tax deadlines.

Final Thoughts

After you’ve thought of a great business plan, taking steps to start your business is exciting, but the legal technicalities and guidelines can be confusing. Identifying how you want your company to be structured is the first step, whether as a sole proprietorship, a corporation, or a limited liability company. Each business structure offers its own advantages and disadvantages, meaning it’s vital for you to learn about each option and decide based on your company’s unique needs. Filing articles of incorporation is a lengthy process, but it will be worth it in the long run as your new company gets started.

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