What are articles of incorporation? Definition and what to include

Articles of incorporation formally establish a business as a legal entity and provide legal proof that the corporation has a right to operate in the state. The documents, which are sometimes referred to as the corporation’s charter, are a required part of forming a corporation in each of the 50 states and the District of Columbia.

The articles provide the state with basic information about the business, including its name, address and registered agent contact information, as well as its purpose and the people who serve as its incorporators. The requirements for filing articles of incorporation vary by state, but for most jurisdictions, the articles must state the number of shares authorized by the firm and the par value of the shares.

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What are articles of incorporation?

The U.S. Small Business Administration (SBA) defines the articles of incorporation as “a comprehensive legal document” that describes the business and lists the contact information for official communications with the state and other entities. 

Articles of incorporation are required to sell shares in the business and to obtain corporate tax benefits, as well as to safeguard the personal assets of incorporators, directors and officers from the company’s liability.

Preparing the articles of incorporation for filing is usually simple and straightforward. However, many businesses choose to consult with a business attorney as part of the process to confirm that the articles comply with state law and the information they contain is accurate and complete. Some common requirements include:

• The business name must be unique and include a corporate identifier, such as “Corporation,” “Company” or “Inc.”
• If the business name differs from that of the owner, the firm may need to file a Doing Business As (DBA) form.
• The business’ purpose must be stated clearly but phrased in a way that doesn’t limit the company’s prospects.

When are articles of incorporation required?

Any person or entity forming a limited liability corporation (LLC) or other form of corporation must file articles of incorporation with the office of the secretary of state or other agency designated by the state in which the business will be established. By contrast, sole proprietorships and partnerships are established automatically once they begin doing business.

Because the rules for filing articles of incorporation vary by state, the first step in preparing the articles is to check with the Secretary of State or relevant state agency to determine its requirements. The state may refer to the document as a Certificate of Formation, Articles of Organization or similar name. For LLCs, the document is referred to as the articles of organization because LLCs are “formed” rather than “incorporated.”

What should articles of incorporation include?

The articles of incorporation can be limited to the information that the state requires or customized to include provisions that describe how the business will be managed. They may also outline the rules that the business will adhere to and define the powers of directors, officers and shareholders. However, all information in the articles must be consistent with state laws.

The basic information about the organization that all states require includes:

• The business name and address.
• The name and physical address of the company’s registered agent (no post office boxes). The registered agent is the contact person for official documents sent to the business, including service of process and other legal matters.
• The company’s purpose, which is typically stated broadly to allow expansion into new areas.
• The names of its directors and officers.
• The total number of shares issued and the share values. 

Other provisions that are commonly included in articles of incorporation and which may or may not be required by state law include:

• The names of the initial directors.
• Preemptive rights granted to existing shareholders to preserve their voting power.
• Cumulative voting provisions that grant minority shareholders extra voting power.

Many corporate regulations can be placed in the company’s bylaws, which need not be filed with the state, but others must be included in the articles of incorporation to be effective. These include the business name and legal address, purpose, registered agent name and physical address, incorporators, directors, officers, authorized shares of stock, stock par value and preferred shares.

How to file articles of incorporation

Once you’ve written and signed your company’s articles of incorporation, you submit them to the appropriate government office in your state, which is usually the secretary of state. You’ll find instructions for filing the articles of incorporation on the agency’s website. The fee for filing the document ranges from $20 to $300, depending on the state where you’re incorporating. The filing fees for nonprofit articles of incorporation are typically lower.

After you upload the required forms through the state office or mail the documents to the state office, they’re reviewed and accepted by the state. Some states issue your business a certificate of incorporation, and upon acceptance of the articles, your business is able to operate legally in the state, including opening a bank account in the business’s name and applying for a business loan.

What to do after filing

When the state office receives your articles of incorporation, it confirms that the forms are complete and the company name is available and acceptable. Once the agency accepts your company’s articles of incorporation, you need to take several steps to confirm that your business will meet its legal and tax obligations:

• Apply for an employer identification number (EIN), which is also called a tax ID. The EIN is used to identify the business on its tax returns, as well as for opening a bank account and managing employee payroll.
• Create a business plan that describes the company’s goals and lays out the roadmap for achieving those goals. A business plan is especially important for attracting investors and financing.
• Separate the personal assets of the firm’s officers and directors from those of the business by opening a dedicated bank account through which all business transactions are made.
• Keep informed of changes to IRS and state tax regulations that apply to your business types, such as S Corp, C Corp, LLC or nonprofit corporation.

How do you amend articles of incorporation?

As the information in a business’s articles of incorporation changes over time, the company’s directors and officers are obliged to update the document so it reflects the firm’s current operations. These are among the conditions that would necessitate amending a business’s articles of incorporation:

• A change in the business name.
• Designation of a new registered agent, including the new address and contact information.
• Addition or removal of officers, directors or members.
• A shift in its business purpose.
• The addition of new stock offerings.
• Changes in how existing shares are valued.

Failure to update the articles of incorporation can violate state law and cause a firm’s legal status to be invalidated. Some states require that all shareholders agree to the articles of incorporation amendments, but most allow changes when a majority of shareholders approve the updates. Note that a handful of jurisdictions empower directors and officers to amend the articles of incorporation without the approval of shareholders.

Once the amendments have been vetted by internal stakeholders, an updated version of the articles of incorporation is filed with the secretary of state, typically using a link for this purpose on the agency’s website. The amendments are added to the original articles of incorporation document rather than replacing the initial filing.

Articles of incorporation example

Several organizations offer free templates for articles of incorporation for each state and the District of Columbia. The templates are usually in PDF, Microsoft Word or other editable format. One example of a template for articles of incorporation includes 13 separate articles:

• Article I: Business Name includes a corporate identifier, such as “Inc.” or “Corp.”
• Article II: Duration is usually perpetual, lasting until the business is dissolved.
• Article III: Purpose describes the firm’s primary business activity, often stated generally as “to conduct a lawful business.”
• Article IV: Powers explains the company’s powers under the state’s business laws, including the ability to open a bank account in the business’s name.
• Article V: Initial Registered Agent is the name and physical address of the person charged with receiving the firm’s official notices and correspondences.
• Article VI: Statement of Acceptance by Registered Agent acknowledges the registered agent’s agreement to serve in the role.
• Article VII: Principal Office and Mailing Address lists the firm’s official address.
• Article VIII: Authorized Shares states the number and class of shares the company will issue. Most states require that at least one share be offered, usually common or preferred class. Some states also require a par value for the shares, which is typically the lowest price at which the shares can be sold.
• Article IX: Directors and Officers include the names, addresses and titles of the company’s officials.
• Article X: Bylaws simply state that the firm will adopt initial bylaws. Unlike the actual articles of incorporation, bylaws don’t need to be filed with the state.
• Article XI: Dissolution explains how the company’s shares and assets will be distributed once it is dissolved, as stipulated in its bylaws and according to state law.
• Article XII: Indemnification states that people acting in good faith on the company’s behalf are indemnified against personal liability.
• Article XIII: Incorporator is the person who signs and submits the articles of incorporation. The incorporator is usually an officer, director or a third party who is authorized to complete the articles.

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