What are articles of incorporation? What should be included?

Legal terms • corporation • articles of incorporation

If a corporation is the right type of business structure for you, then you have probably come across the term “articles of incorporation.”

They are a necessary part of forming your corporation. They bring your business into legal existence, broadly sketch out its structure and purpose, establish its limited liability, and provide basic information on your corporation to the legal and business community. Thus, they are of great importance and are not something any small business owner would want to get wrong.

In this article, we will walk you through what articles of incorporation are, what they include, and why they are necessary before answering several other common questions small business owners often have about them.

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What are articles of incorporation?

Articles of incorporation are a legal document that establishes the formation of a corporation. Filed with the appropriate government authority, usually the secretary of state where it is located, they lay the groundwork to officially set up a corporation. In some states, they are referred to as a certificate of formation, certificate of incorporation, or corporate charter.

Articles of incorporation are a necessary component of the process of corporate formation, and when they are filed with the state, articles of incorporation become public record. They are meant to be available to people who want to know essential details of a company. These people may have legal or business dealings with your corporation, so the state wants to ensure an orderly and above-board process of transacting with you. They can be amended or changed, so the version that is filed is not set in stone.

While articles of incorporation apply to corporations only, operating agreements are used for limited liability companies (LLCs). Both outline the business structure, ownership, and other basic business information, but they apply to different business forms and are not the same thing. Bylaws are another separate, but somewhat related, document. Whereas articles of incorporation are public and establish a legal framework, bylaws are typically internal and deal with more detailed information about an organization’s inner workings.

Why do you need articles of incorporation?

Filing articles of incorporation is a legal requirement of the corporate formation process in most jurisdictions. Furthermore, articles of incorporation are fundamental to good business practice. They provide the most important information about your corporation and, because they are kept on file with the secretary of state, help members of the legal and business community get in touch with your corporation when they have business to conduct.

If you are wondering why business owners find it worthwhile to form as a corporation (and thus undertake development of articles of incorporation), it is because doing so enables them to issue stock, which can raise significant capital. It also offers some tax advantages and shields the business owners from personal liability. (LLCs, which cannot issue stock, offer these advantages as well.)

With that understanding of what articles of incorporation are, let’s look at what is important to include.

What is important to include in articles of incorporation?

Articles of incorporation contain essential information about the corporation. Think of them as an FAQ or guide for the most need-to-know public information (more on that later) about your business that is kept on record with the secretary of state.

Articles of incorporation often include:

• Corporation name: This is the full legal name of the corporation you are starting. Make sure your company name is not in use by anyone or anything else. Failure to do so may result in legal complications down the line.
• Principal address: Use the address where someone could contact you for communication that is less important than service of process, which is handled by a registered agent. Some small-business owners prefer to have a P.O. box for their principal address. That is sufficient in some jurisdictions, but a physical street address is generally preferred. A physical street address lends credibility to your business, avoids potential shipping problems, and is accepted in all jurisdictions.
• Registered agent: Include the registered agent designated to receive service of process, or important and official government correspondence that can include notice of being sued, including name and the address. In this instance, “address” is best interpreted as physical or street address; a P.O. box will not suffice here.
• General business purpose: Lay out the highest-level objectives out what your business is meant to do. Think of this as the purpose of the corporation. For most for-profit corporations, the general business purpose is to earn a profit for shareholders. This portion of the articles of incorporation should give a good understanding of what the business does and how it is managed. It does not have to be so detailed as to elaborate what divisions or departments within the corporation do.
• Type of corporation: Set out whether your corporation is an S corporation (or S corp), C corporation (C corp), or not-for-profit corporation.
• Stock details: Include the type of stock and the number of shares to be issued, as well as their pricing.
• Board of directors: Identify the members of the board of directors and share their addresses. Most jurisdictions permit either a home or business address to be used.
• Duration of the corporation: State the duration in years that you expect your corporation to operate. A chief benefit of the corporate form is that it can exist in perpetuity. As a separate legal entity from its owners and founders, it can continue to exist even after an owner divests of his or her interests, passes away, etc. However, if your corporation is only intended to exist for a certain period of time, you would mention that.

What articles of incorporation must include varies slightly from state to state, and what is required to include is not always an exhaustive list of what would be good to include. Sample articles of incorporation of how they look like can be found on many secretaries of states’ websites, and legal software providers may have state-specific templates that can save you from needing to draft your articles from scratch. Here are sample templates with drafting tips from the states of California, Florida, Georgia, and New York.

How to amend or change articles of incorporation

Articles of incorporation can be changed and amended. Different states handle the process differently, but the general process is as follows:

1. Draft specific articles of amendment. A document entitled ‘articles of amendment’ or something similar should very specifically spell out what about the original articles of incorporation is to be changed. This document needs a formal stamp of approval from a corporate officer or director.
2. Obtain necessary approvals. If your corporation has a board of directors, the articles of amendment may need the board’s approval. Some states also require shareholder approval.
3. File articles of amendment. Once all necessary approvals have been obtained, the articles of amendment must be filed with the same state agency that received the articles of incorporation. That is most often the secretary of state. There is usually a filing fee associated with this step.
4. Provide appropriate notice. Some jurisdictions require that corporations publish notice of the changes to their articles of incorporation. Usually, a classified-type ad in a legal or business publication will fit the bill.

Amending your articles of incorporation can be tricky, so engaging the services of an attorney might well be a good use of your resources. Alternatively, use online legal resources to help with samples and drafting tips per state, e.g. for a Colorado corporation and a Georgia corporation.

Having explored what articles of incorporation are, what they do, and how they can be changed, it’s time to take a look at some of the more fundamental questions, like the filing process.

Who files articles of incorporation?

Incorporators are the people or the company that deliver the articles of incorporation and the filing fee to the secretary of state for filing. In many cases, an incorporator is an attorney the corporation’s owners have hired.

If the articles of incorporation identify the corporation’s initial directors, the incorporator’s duties end at the time of filing. If they do not identify the corporation’s initial directors, then the incorporators must elect them; once they are elected, the incorporator’s duties cease. Most states require only one incorporator, but some states require as many as three.

When and where should you file?

Articles of incorporation must be filed at the time the corporation is formed. This is required by all 50 states for the formation of new (domestic) corporations. Without properly filed articles of incorporation, you cannot take advantage of the benefits of the corporate business entity, and may find yourself in hot water with the IRS in the future, which is not something anyone wants. That being said, the articles of formation filed when a corporation is begun are not immutable.

Articles of incorporation are filed with the state’s secretary of state where they are located – see a directory with state websites and phone numbers. The incorporator or incorporators handle this step, and there is a filing fee.

How much are filing fees?

The filing fee for articles of incorporation is usually somewhere between $50 and a few hundred dollars. All 50 states require a filing fee, and $100 is the most common. As of May 2024, Texas charges the most at $300. Several states, including Michigan and Colorado, are tied for charging the least at $50.

To provide some specific examples of states that are popular venues for corporate formation, California charges $150, Delaware charges $109, and New York charges $125.

Filing fees, like any fees, can change over time, so it is a good idea to check to make sure you have the right amount.

Conclusion

By now, you should have a better sense of what articles of incorporation are, why they are important, and how you go about filing and amending them. If you are new to this process and are not sure of how to best proceed, remember that template articles of incorporation, such as those from the legal research software Practical Law, might be a good place to start so you do not feel like you are flying blind.