Articles Of Incorporation Meaning Example Purpose Sample

Articles of Incorporation Meaning

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Also known as corporate charter or articles of association, these documents contain significant information about the businesses, including their name, type, nature, and address. As soon as a business applies for a license or receives it, it would require filing for the certificate of incorporation alongside.

Key Takeaways

Articles of Incorporation is a set of documents that secures business status for an entity that aspires to be one.A company files it for tax benefits, perpetual existence, liability protection, and enhancement of its corporate image.The incorporator must pay a mandatory filing fee to the registrar or the Secretary of the State.The company will legally be affirmed with a corporate status upon the approval of the Secretary of State.

Articles of Incorporation Explained

Articles of Incorporation make you a legally identified business entity. The requirement may vary from state to state, but the purpose is the same everywhere around the globe. These are sets of documents that elaborate the type, nature, and purpose of the business along with specifying its name, contact details, information on the stocks issued, etc.

The incorporator must apply along with the documents and pay the mandatory filing fee to the registrar or the Secretary of the State when applying for the company’s incorporation. The filing fee varies depending on the entity type and the country it is being incorporated in.

A corporate can either prepare Articles of Incorporation by itself or may contact a professional for the purpose. The documents must be accompanied with a set of all necessary credentials. However, this does not mean it must be extensive or highly complicated. A self-made filing is also acceptable but only if it has the required basic minimum information.

A company seeking to file its Articles of Incorporation will primarily need to choose a particular state in which it wishes to incorporate its business. For example, a company that performs its business operationsBusiness OperationsBusiness operations refer to all those activities that the employees undertake within an organizational setup daily to produce goods and services for accomplishing the company’s goals like profit generation.read more in a single state can choose to incorporate in that state. On the other hand, if the company is willing to perform its activities in multiple states, they get considerable relaxation for the same.

The Secretary of the State takes care of the filings. Further, the documents are verified and reviewed by state authorities. Then, they check if the planned business operations are per the standard guidelines and regulations. Once the verification and validation process completes, the authorities notify the companies of their status.

Purpose

Filing the corporate charter with the government is a legal requirement, and owners must not forget to do it if they want to secure their status as a legally established business firm. They need to draft a complete portfolio defining the structure and nature of the business. Until the authorities accept it as a corporation, it cannot operate as an authorized entity.

The document helps your businesses to remain registered with the authorities for perpetual existence. This means even if the owners die or leave the business in the future, the business will keep running with new people taking charge. In addition, when an entity has a certificate of incorporation, it has the liberty to transfer ownership to another organization.

Registering the business allows tax cuts on operating costs. In short, when the corporate charter is filed, tax advantagesTax AdvantagesTax Advantage are the types of investments or saving plans that benefit tax exemption, deferred tax, and other tax benefits. Examples include Government bonds, Annuities, Retirement Plans. read more are the major features, and hence, businesses file it to fulfill the purpose of receiving significant tax benefitsTax BenefitsTax benefits refer to the credit that a business receives on its tax liability for complying with a norm proposed by the government. The advantage is either credited back to the company after paying its regular taxation amount or deducted when paying the tax liability in the first place.read more.

Whether it is the Articles of Incorporation for a non-profit organization or a corporation, once a business has the certificate of association filed, it keeps owners protected from liabilities. As a business entityBusiness EntityThe business entity concept declares that a business stands independently from its owner, and hence the two should be treated as separate entities when recording transactions. Therefore, all business transactions (income, expenses, assets, liabilities, and equity) must be kept separate from the owner’s account to ensure accurate accounting records.read more, the personal assets of the owners and executives get a separate identification, and hence, owners do not count them as resources to cover up business’s liabilities even in the worst scenarios.

Information Included

Looking at the Articles of Incorporation sample lets businesses come across the information that needs necessary mention. Here is a list of some of them:

Name of the companyName of the registered agentAddress of the registered agentType of corporate structure (professional corporation, profit corporation, non-profit corporation, non-stock corporation, etc.)Corporate purposeNames of the first board of directorsBoard Of DirectorsBoard of Directors (BOD) refers to a corporate body comprising a group of elected people who represent the interest of a company’s stockholders. The board forms the top layer of the hierarchy and focuses on ensuring that the company efficiently achieves its goals.
read moreAddresses and other personal information of the first BODIf owners establish the corporation for a limited period, they must specify the duration of the same.Number of authorized equityEquityEquity refers to investor’s ownership of a company representing the amount they would receive after liquidating assets and paying off the liabilities and debts. It is the difference between the assets and liabilities shown on a company’s balance sheet.read more sharesType of authorized equity sharesDetails of the incorporator such as name, address, and signature.

Example

Here is an Articles of Incorporation example that shows what the document looks like:

Articles of Incorporation vs Articles of Organization

Articles of Incorporation and Articles of Organization are terms that companies might use as substitutes. However, these words might be similar but not the same. While the former helps in the establishment of a corporation or non-profit organization, the latter enables the formation of a Limited Liability Company (LLC). Thus, it’s never an Articles of Incorporation for LLC rather an Articles of Organization for it.