Articles of Incorporation: Definition & Overview

KEY TAKEAWAYS

• The articles of incorporation are the proper documents needed to file to become a corporation.
• They contain all of the relevant information needed in order to carry out the process of forming a corporation. 
• For a business to be legally recognized as a corporation, these documents must be filed and approved by the state.

What Are the Articles of Incorporation?

Articles of incorporation are a set of formal documents that are filed with a government body. They are used to legally document the creation of a corporation. These articles will tend to contain the pertinent information needed in order to carry out this process. This includes things such as the company name, the street address, and the amount and type of stock that is to be issued. 

Articles of incorporation are also commonly known as the corporate charter. As well as the articles of association, or the certificate of incorporation. 

Why are Articles of Incorporation Important?

Many businesses in either the United States or Canada are formed as a corporation. This is a type of business operation that is formed in the state where the company carries out its operations. 

In order for a business to be legally recognized as a corporation, then they must take certain steps. As well as make certain decisions to incorporate. These are all things that are required under corporate law.

One of the most important things is filing out the articles of incorporation. 

These are the necessary documents needed to register a corporation with the relevant state. This is the state where the corporation will be based. They act as a charter to recognize the establishment of the newfound corporation. 

The legal documents outline the basic information that is needed in order to form a corporation. As well as the governance of a corporation, and the corporate statutes in the state where the articles are filed. 

What are the Benefits of Filing Articles of Incorporation?

There is only one real benefit to filing articles of incorporation – and that is it is necessary in order to become a corporation. 

There are a number of benefits of incorporating your business. They include:

• Asset protection through limited liability
• The creation of a corporate identity
• The perpetual life of the company
• An easy transfer of ownership
• The ability to raise capital and build credit
• Tax savings

Requirements for Articles of Incorporation

The requirements for filling out articles of incorporation will vary depending on what state you are in. But as a general rule of thumb, these articles are typically included:

• Name of the corporation
• The name and address of the registered agent
• The type of corporate structure the corporation will have (for example a nonprofit corporation)
• The names and addresses of the initial directors
• The type and number of authorized shares
• The duration of the corporation (depending on if it was established to exist perpetually or not)
• The name, address, and signature of the incorporation agent

Most of the 50 states will also require the articles to state the purpose of the company. Though the corporation may have very broadly defined purposes to maintain a certain level of flexibility in its general operations.

Summary

Setting up your business as a corporation has a wide range of benefits. Although it’s not necessarily the way to go for every business out there. 

A business owner will need to do their due diligence and research what type of business they would benefit most from forming. It can depend on a wide range of factors such as the industry, size, and setup of the business.

One thing is for sure. If you decide to incorporate your business, then you will need to follow and fill out the articles of incorporation.