The Articles of Incorporation is the basic instrument filed with the appropriate government agency, the Secretary of State, for the incorporation of a business. Articles of Incorporation is the most common name for this instrument, but it may also be called a Certificate of Incorporation (Delaware uses this term), Certificate of Organization, or Certificate of Formation. The actual name will vary from state to state.
For specifics on the incorporation process, see the Step-by-Step Guide to Incorporating a Business.
Filing and Fees
The Articles of Incorporation should be filed at your chosen state’s Secretary of State or other state corporate filing office. Fees for filing the Articles will vary from state to state. All states require a single written document to be filed to form a corporation. This is a simple process, and most states offer preprinted forms for ease of use. These forms can be obtained online from your state’s Secretary of State, or by calling or writing the Secretary of State to request the form. Not only must the Articles of Incorporation be filed, but they must also be filed at the correct state office. The correct filing location will be designated by your local Secretary of State, and will also be indicated on the form or its instruction sheet.
Formation of Legal Entity
A corporation becomes a legal entity after the Articles of Incorporation have been filed with, and are approved by, the appropriate state corporate filing office.
Basic Requirements for Articles of Incorporation
The basic information required for all Articles of Incorporation includes:
- Name of the corporation, including “Inc.,” “Corp.,” or other designator at end of name.
- Purpose. Many states have specific language required for the purpose statement in the Articles. The purpose language is some variation of the following: “The purpose of this corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of [INSERT YOUR STATE].”
- Name and address of agent for service of process. An agent for service of process, or registered agent, is the person who agrees to accept notice of lawsuits filed against your corporation, and other legal documents on behalf of the corporation. A corporation may not designate itself as the agent, and a street address must be provided.
- Number of shares. The number of shares is the total number the corporation will be authorized to issue. If your corporation is to be an S Corporation, the corporation will be allowed to issue only one class of shares which may be held only by a certain number of persons.
- Signature of incorporator or signatures and addresses of directors. Most states allow the Articles of Incorporation to be signed either by the incorporator or by the initial directors of the corporation, if named in the Articles.
Although every state requires that Articles of Incorporation include the basic information listed above, each state will also have its own requirements as to how the Articles are to be drafted. You must check the instructions of your chosen state’s Secretary of State for the specific requirements and restrictions for all required articles in your Articles of Incorporation.
Sample transmittal letters for the Articles of Incorporation to the Secretary of State are available for preview and purchase on AllBusiness.com’s Incorporation Forms.
If your corporation is to be an S Corporation, the proper election forms must be filed with the Internal Revenue Service and your chosen state’s tax authority.
Your corporation may be formed in a state that requires additional information in the Articles. Check with your chosen state’s Secretary of State to see if any other information must be included. The other information required for Articles of Incorporation by your chosen state of incorporation may include:
- The duration of the corporation (if not perpetual);
- Close corporation language;
- Whether the corporation will have cumulative voting or preemptive rights;
- Whether the corporation will offer different classes of stock shares;
- The Standard Industrial Classification (SIC Code) of the corporation. Some states use the SIC Code, which attempts to classify types of businesses by code name and number. If your chosen state of incorporation uses the SIC codes, it will provide you with a list of codes and a process by which one will be issued for your corporation.
- Provisions for the regulations of your corporation’s internal affairs.
Optional Additional Sections for the Articles
Although it’s probably a good idea to stick to a simple form for your corporation’s Articles of Incorporation, state law may allow you to add sections that aren’t required. You might want to include additional sections that:
- Limit the liability of your corporation’s directors for monetary damages to the fullest extent permissible under your chosen state’s law;
- Indemnify corporate agents;
- Add reasonable restrictions on the right to pledge or transfer stock shares;
- Give the Board of Directors the power to adopt, amend, or repeal your corporation’s Bylaws.
If you think you might want to include any of the above sections to your Articles of Incorporation, you’ll need to determine whether they are allowed, required, or prohibited by your chosen state.