Articles of incorporation template is a document that contains the name of a state within which your business will be running and useful information about your business. This is the public information that you will provide in this document.
What are Articles of Incorporation?
Articles of incorporation are a set of formal documents filed with the state government in order to form an incorporated business. Your company is considered as registered business entity for legal and tax purposes within the state when the Articles of Incorporation are filed with the Secretary of State. However, the particular rules and regulations regarding incorporating a business may vary from state to state.
Some other names of Articles of incorporation are;
- Certificate of Incorporation
- Corporate Charter
- Business Incorporation Papers
- Articles of Organization
- Company Constitution
Information to include in Articles of Incorporation:
The articles must include the following information;
- The name of the corporation
- The total number of shares that a corporation is allowed to issue
- The initial registered office and registered agent address
- Each incorporator’s name and address
- The names of any initial directors
- The primary activities of the corporation
- The purpose of the corporation
- Any initial provisions that govern the management of the corporation
Features of articles of incorporation:
Here are some common features that you have to present in your document;
Corporate name
As a company, you have to specify the name you wish to trade. This will be your identifier and generally followed by a unique identifier like Company, Corporation or Incorporated. They can also be abbreviated as Co., Corp., or Inc. respectively.
It is wise to run a name availability search before you submit the articles of incorporation template. This way, you know whether the name you want to use is already in use by another entity or not. No matter whatever the name you select to work with, it is up to the state where you seek incorporation to verify and identify whether the name you are using is unique or not.
Purpose of your business
Here, you have to mention the reason that why you are getting into the business. What services you want to offer? There are two options under this clause i.e. General or Specific. Basically, in case of a general clause, your company has to take part in any kind of legally acceptable business. While, in case of a specific clause, it will limit your business to give a careful and provide explanation of the nature of services or business that you will engage in.
A registered agent
Technically, at the time of incorporation, each state expects your corporation to have a registered agent. The agent’s role is to receive any important documents, particularly legal and tax related for your business. The agent should have a physical address. During the normal work hours, the agent has to be reachable.
Most of the businesses prefer to use a registered agent service provider in order to ensure that all their documents are received on time and properly handled with the discretion that they desire. This way, it is also easier as the agents will also give a host of other compliance services.
An incorporator
An incorporator is an individual or the company. They have assigned a task to file the Certificate of Incorporation with the respective state where you are creating your application. You will require their address, signature, and name included. The incorporator have to be a representative of the service provider guiding you through incorporation in the incorporator must be a representative of the service provider guiding you through incorporation.
Share capital
You also have to specify the number of shares you are authorizing while filing the application. The size of your corporation doesn’t matter. You just have a stock as it represents the ownership of the company.
Before declaring large amounts of share capital, you also have to understand that in some states on the basis of the number of outstanding shares your company owns you the number of outstanding shares your company owns.
Share value
It is simply the least stated value of the shares of a company. This is, in most cases, close to the actual value of the shares of your company. The fair market values or Articles the value are the actual value of the shares of your company. In the case of a public company, this would be identified by the price that at the exchange, investors would be comfortable paying for each share. However, in case of private corporations, it is identified by the book value or the overall value of the company.
Directors
In most states, it is compulsory that at the formation of the company the names and physical addresses of the directors are indicated in the documents of incorporation. For overseeing the affairs of the corporation and making all the important decisions, these are the people who are responsible.
Company officers
In the document, clearly indicate who the officers of the company are. These may involve the secretary, the vice president, the president and so forth.
Company address
Specify the legal address at which the company will be located. In some states, this is generally optional but where mandatory, it has to be present.
What is the significance of Articles of Incorporation?
The three most important reasons that why you must incorporate your company are;
- For the sake of accountability
- In order to prove that you are a credible business
- To become a legal entity
Never-ending existence
An incorporated business has never-ending existence as the company would never be affected by the dismissal, death or removal of any one of the owners. This is a huge benefit of incorporation that you must appreciate.
Limited liability clause
If you want to keep your business secure from unforeseen liabilities then you must incorporate your business. Your company is considered as legal entity after incorporation. Your personal assets get secured as your creditors can only deal with the company. If the company is facing liquidation, the things that you own will never come under liability.
Tax benefits
Your corporate tax liability due to incorporated business will be cut down significantly as you receive number of tax deductions from a number of operational costs. You will enjoy the tax deductions under the following expenditure;
- The cost of employee wages
- The cost of production
- The cost of materials
- The cost of insurance
- Retirement plans
Your company image gets improved
The image of your company enhances once your business has incorporated. Incorporation also adds credibility to your operation. Due to the positivity that incorporation brings to your image, more people will trust and make business deals with your company.
Requirements of articles of incorporation:
From your articles of incorporation, the structure of your organization is actually obtained. Here are some of the key requirements that you require for the articles of incorporation;
Application fee
With the secretary of states, each incorporator has to file their duly filled forms. These documents must include information regarding your principal address of business operation. There will be a filing fee that you have to pay on the basis of the state wherein you will be conducting the business operations of the corporation.
Furthermore, duly filing and incorporating will be the official proof that your company exists in the eyes of the law. It is also proof that you, or the incorporators, for the formation of a corporation, will have already complied with all the necessary requirements.
Provisions
In the articles of incorporation, any provisions have to meet the state statutes for them to be legally binding. You have to include the following mandatory provisions in your articles of the corporation;
- Purpose of make this corporation
- Name of the corporation
- Address of the corporation
- Intent to corporate
- The duration of the corporation
Optional provisions
These are instructions that govern the internal affairs relevant to any organization. Include the following in the articles of incorporation;
- Share transfer restrictions
- Shareholders’ rights to buying shares
- The corporation’s right to buying its own shares
Bylaws vs. Articles of Incorporation
The two terms Bylaws and Articles of incorporation are used interchangeably and they mean different things altogether. You must learn how to use them and what they mean.
Articles of incorporation, in many circumstances, known as a charter, or a certificate of formation. They are legal papers including basic and general details about a company that anyone would like to know about. While, bylaws is a set of rules and regulations under which a company operates. The duties and roles of the officers and directors of the company are made through bylaws corporate.
Apart from the definitions, here are some features that make the difference between bylaws and articles of incorporation clear;
Criteria
In case of articles of the corporation, may states generally use fill in the blank articles as the nature of required information is pretty much the same. The important details that have to be available are the location and legal name of the company.
On the other hand, for corporate bylaws, there is no fill in the blank options as different corporations have a unique mode of operation. That’s why, in each organization, the provisions of operation may vary.
Cost
While applying for and filing articles of incorporation, there must be an applicable fee. However, amount of fee may vary from state to state. As a company, the most essential step you have to take is to complete these articles in order to ensure that your entity is incorporated. While, for filing corporate bylaws, there is no applicable cost.
Submitting the files
Submit your articles to the department of state or the secretary of state if you want your company to be duly considered and registered. After this, your company will be considered a corporate entity. However, it depends the nature of your corporation whether you submit the articles in person at the office of the department or secretary of state or sent by mail.
On the other hand, bylaws aren’t required to file with government agency. You have to maintain the bylaws of your company at your primary location of doing business.
Stock options
You have to mention in your Articles of incorporation the number of stock options that your corporation is allowed to issue.
In case of bylaws, whether you have to state the amount of stock or the value of the stock the company owns. In addition, on the basis of the types of shares that they own, they may show rights of every shareholder.
Amendments
The process of amending Articles of incorporation is different the process of amending bylaws. Amending Articles of incorporation has involve a unique procedure. You need to file your articles with the secretary or the department of state in case you want to change of the name of the business or business location.
In matter of bylaws, the shareholders and directors just have to vote to change the bylaws. A majority of the shareholders have to accept the changes made to the bylaws.
Conclusion:
In conclusion, the articles of incorporation template is an important business document that proves you are a credible business and make you a legal entity. Your company has to be incorporated under the laws of the state for success.
