Articles of Incorporation
Articles of Incorporation are also known as:
- Certificate of Incorporation
- Corporate Charter
- Business Incorporation Papers
- Articles of Organization
- Company Constitution
What are Articles of Incorporation?
Articles of Incorporation are legal papers filed with the state government
when you are incorporating a business. The articles must detail the name of
the corporation, the number of shares the corporation is authorized to issue,
the address of the initial registered office and registered agent, and the
name and address of each incorporator.
The articles may also contain details like the names of any initial
directors, the primary activities or purpose of the corporation, and
any starting provisions governing the management of the corporation.
The specific laws and regulations applicable to incorporating a
business vary from state to state. LawDepot's Articles of Incorporation
form is customized automatically based on the state you select.
What are the different types of corporations?
There are three common types of corporations in the United States:
- Subchapter C Corporation: a C Corporation (or simply Corporation) is the
traditional model of incorporated business and the structure used by most major
companies. A C corporation is a distinct legal entity from its shareholders for
the purposes of asset ownership, legal liability, and taxation. The business
owner benefits from maximum protection of personal assets, and the company is
in a position to attract investment through issuing shares.
When it comes to taxes, the corporation must pay corporate taxes on its
profits while shareholders will also be liable to pay personal income tax
on any salaries, bonuses, or dividends paid to them.
- Limited Liability Corporation: LLCs are a more recent innovation designed
to suit smaller businesses by combining the benefits of limited liability of a
corporation, with the tax and administrative efficiencies of a partnership.
The owners' personal assets are protected from the LLC's liabilities and debts
just like with a corporation, but there is generally less paperwork and regulation.
For federal tax purposes an LLC is not viewed as a separate business entity,
so the owners pay self-employment taxes directly on the profits. Be aware that
some states do apply corporate taxes to LLCs.
- Subchapter S Corporation: an S Corporation is characterized by
either an eligible C Corporation or LLC making an IRS tax election as a
Small Business Corporation. The result is the profits and losses of the company "pass through"
to the shareholders so they are taxed directly, while the S Corporation itself is
not taxed, thus avoiding the "double taxation" of a C Corporation. Note however
that any shareholder who works for the S Corp would have to pay themselves a
reasonable salary and be taxed on that employment income.
The tax treatment of S Corp elections varies from state to state. An LLC or
C Corporation is eligible to become an S Corp if it has a maximum of 100
shareholders, each of whom must be individuals (not corporations or partnerships),
and who must be U.S. citizens or permanent residents.
What is a registered agent?
A registered agent, also known as a resident agent or
statutory agent, is a person with a legal street address (not just
a PO box) in the state where the company will be incorporated.
The registered agent must be available during regular business hours,
and is responsible for receiving government documents relating to taxes,
and any official papers concerning legal actions related to the business.
When can I use Articles of Incorporation?
Articles of Incorporation may not be used for companies based in
certain industries, depending on your state laws. In the State of Florida,
for example, the Articles of Incorporation form cannot be used to
incorporate businesses from the following industries:
- Banking and credit unions
- Savings and loans
- Railroads and waterworks
- Utilities and other public services
Why should I use Articles of Incorporation?
Articles of Incorporation are a requirement for incorporating your business.
You should consider incorporating your business to receive the following key benefits:
- Protection of personal assets from business creditors and legal action.
- Tax management options for income and deductions.
- Issue of shares which can be sold to raise business capital.
- Separate legal entity status, which can make the business more attractive to lenders.
- More credibility and confidence in your business in the marketplace.
Forms related to Articles of Incorporation