Creating the Articles of Incorporation for a Corporation

After you select the name and state of incorporation for a proposed corporation, you must file the official document creating the corporation with the Secretary of State. This document is called the Articles of Incorporation or the Certificate of Incorporation, depending on the state.

The Articles are typically short, two to three pages long. The key sections are as follows:

• The Corporate Name. This section of the Articles identifies the formal name of the corporation.
• The Purpose of the Corporation. Many states, including California and Delaware, allow this section to simply state that the purpose of the corporation is to engage in any lawful activity for which corporations may be organized in that state. You usually fare better when this clause is more general, because you then have flexibility to expand your business into almost any area.
• Duration. Most state statutes provide that the corporation can have a perpetual duration. You generally don't want the Articles to provide for a fixed term of existence.
• The Authorized Capital. This section must set forth the total number of shares that the corporation can issue, the par value per share, and the different classes of stock. Typically, you have only one class of Common Stock, but sometimes you can issue both Common Stock and Preferred Stock. This section should authorize a sufficient number of shares to cover the founders' shares plus shares that may be issued to future employees or investors. If the state doesn't charge you extra, think about authorizing 10,000,000 shares.
• Name and Address of Registered Agent. Most states require the corporation to designate the name and address of a registered agent for service of process in the state. The registered agent is the person given notice of lawsuits filed against your company. If you are incorporating in a state other than where you maintain your principal office, you can designate various professional registered agent companies for a fee.
• Other Required Provisions. Depending on the state law, some provisions, such as a preemptive right to purchase future shares, must also be contained in the Articles in order to be effective.