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The Articles of Incorporation: What They Are and What You Need to Know

You may know articles of incorporation by other names, such as certificate of formation, or corporate charter, but no matter the name, the purpose is still the same. The purpose of the articles of incorporation is to formally establish and register a corporation under a state’s laws and regulations.

Remember that a corporation, unlike a sole proprietorship, is considered a separate legal entity apart from the people who created it. As such, it must be registered in a state to come into existence. All corporate benefits and obligations flow from this first, mandatory act. For example, the IRS will not issue an employer identification number (EIN) to the corporation until it is formally incorporated in a state.

The form of the articles will vary from state to state, but the fundamental information that they must contain is pretty universal. The articles must contain the name of the corporation—which may also include the required “Inc.” to designate that it is a corporation, the appointment of a registered agent along with their name and address, the type of corporation (non-profit, for-profit, etc.), the corporation’s purpose, and the names and addresses of the initial officers.

Within these required elements are some questions that must be carefully considered before being answered:

The first is the designation of a registered agent, who is going to be the person or entity who is served with important legal documents on behalf of the corporation. The registered agent can be a person, or it can be a third-party service that you hire. The bottom line, though, is that a registered agent must be designated and they usually must be located in the state of incorporation, not necessarily the state in which the corporation is primarily doing business.

The second is the type of corporation, including whether it will be a stock or non-stock corporation. If stock is involved, then there must be a decision made as to the initial number of shares to be issued, the price per share, and if there will be classes of stock. Then, you must determine the purpose of the corporation. This is not actually as lofty as it sounds. It can be as simple as whatever lawful purposes are allowed by the law of the incorporating state. Non-profits may have a more detailed purpose requirement.

Finally, the names of the initial officers of the corporation must be listed. This is because most states require that a corporation have at least two to three officers, including a president and treasurer. The incorporator (i.e. the person who sets up the corporation) must also be listed.

Once this information has been condensed into the articles of incorporation, the articles must be filed and the appropriate fees paid with the corporations division of the office of the Secretary of State where the corporation is to be registered. Remember, it is perfectly acceptable to incorporate in one state and primarily do business in another.

While many states have formatted articles of incorporation, it is still a good idea to have a knowledgeable attorney assisting with the process, particularly with respect to the important questions of where to incorporate, what type of corporation to create (including tax and regulatory ramifications), and the purpose of the corporation. Even after the corporation is established, a business law attorney can assist with maintaining the corporation, drafting the bylaws, advising regarding corporate regulatory requirements, and handling shareholder issues. The team here at Trembly Law Firm can help you with any and all of these services. Contact us

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