Incorporation Papers (Best Articles of Incorporation Guide)

August 17, 2020

What incorporation papers do you need to start a business?

Are you looking for the best articles of incorporation guide and how do you file one?

In this article, we will go over the articles of incorporation in detail so you can learn all there is to know about it.

Are you ready?

Let’s get started!!

Article Update: August 17, 2020

Table of Contents

Articles of incorporation

Incorporation papers, or articles of incorporation, are put together when a corporation is formed.

To incorporate a business, a crucial document to be filed are the articles of incorporation.

Articles of incorporation are legal documents filed with a domestic government to formally incorporate and create a corporation or legal entity.

The articles of incorporation will be filed with the corporate registry in charge of the corporate creation process as mandated by the domestic laws.

For example, in the US, the articles of incorporation are filed with the State in which a person wishes to incorporate a business.

In Canada, articles of incorporation can be filed with a federal government and provincial governments.

Once the company is formed by the authorities, you’ll get a certificate of incorporation proving that your corporation has been legally formed.

Definition

According to Investopedia, articles of incorporation are defined as:

“Articles of incorporation are a set of formal documents filed with a government body to legally document the creation of a corporation. Articles of incorporation generally contain pertinent information, such as the firm’s name, street address, agent for service of process, and the amount and type of stock to be issued.”

Terminology

We can refer to incorporation papers using different terms such as:

corporate charter
articles of association
certificate of incorporation
Articles of organization
Business incorporation papers
Business Constitution documents
Incorporation papers

In most cases, these terms are used to refer to the articles of incorporation of a company.

Articles of incorporation vs bylaws

What is the difference between articles of incorporation and bylaws?

Many people are not sure of the difference between articles of incorporation and bylaws.

The articles of incorporation represent incorporation documents needed to be filed with a corporate registry to form or create a corporation.

The corporation papers will define the types of shares the company can issue, how many shares it is authorized to issue along with any other general information about the corporation.

The bylaws represent internal company rules based on which the company is governed.

It outlines how the board of directions can make decisions, how shareholder meetings are held, defines the roles and duties of the company directors and officers.

The company bylaws and the articles of incorporation are the two important legal documents as it relates to corporations.

The articles of incorporation are filed with the corporate registry and the bylaws are generally internal to a company and do not need to be filed.

Amendments

When you first incorporate your company, you may not know where your corporate journey will take you.

You file your articles of incorporation based on your current and immediate needs.

However, as your company grows, you may want to reorganize your company, merge, acquire another, bring investors and so on.

If your articles of incorporation do not allow you to issue a specific type of shares or in the quantity that you need it, you may need to amend your articles of incorporation.

To do that, you’ll need to draft the articles that you need and file that with the corporate registry where your company was initially incorporated.

Generally, you will need to pay a fee for amending your articles of incorporation.

Once the amended articles are approved, the corporate registry will file that in their record and send you a confirmation.

As of the effective date of the amendment, you will be authorized to manage your company based on the amended articles of incorporation.

Importance of articles of incorporation

When you create a new company, you must file the company’s articles of incorporation and the state or province with whom you are filing your articles will need to approve them.

Once approved, your company is formed and can legally engage in business activities.

Separate legal entity

A corporation is a legal vehicle separating the assets and patrimony of the shareholders of the company.

In other words, the company shields the shareholders from personal liability in running their business.

It is crucial to have your articles of incorporation as it allows you to know that the corporate registry has duly formed your company and the legal entity is in good standing.

When doing business with your corporation, as a shareholder, you will not be responsible for the company’s debts and liabilities unless you have personally accepted act as a guarantor with a creditor.

Raising capital

By incorporating a company, you have the ability to raise capital in more flexible ways.

If all goes well and your company operations are promising and potentially profitable, you can raise capital by issuing shares to investors and selling company stock.

Selling company shares is subject to its own rules and regulation but the point here is that your company will have the ability to raise capital through equity financing.

Tax treatment

When you operate a business under an incorporated business, you may benefit from certain tax advantages.

For example, in the United States, an S corporation can offer the ability to a shareholder to pass-through income directly to the shareholder.

We’ve written a comprehensive article on the C Corp vs S Corp explaining the differences between them.

Company existence

When operating a business under a company, your company exists as a separate legal entity different from its shareholders.

This means that a company can exist perpetually.

Although shareholders may transfer their shares, sell stock or even pass away, the company continues to exist no matter the changes in its shareholder base.

When filing incorporation papers, you’ll need to specify if your company will have a limited life or a perpetual one.

Articles of incorporation template

The articles of incorporation must contain some essential information about the corporation or corporate entity being formed.

The laws based on which a corporation is formed will dictate the specific information needed to get your articles of incorporation.

In most cases, you will need to provide the following information:

Corporation name
Type of corporation such as a for-profit corporation, non-profit and professional
Corporate abbreviations such as Inc., Corp., Co., Ltd., Limited, Incorporated, Company and Corporation
The name of a registered agent, if any
The purpose of the corporation to be formed
The classes of stock or shares the company can issue
How many shares of each class of stock the company can issue
The incorporator’s identification
The effective date of the incorporation

You may see slight variations in the information required by different corporate registries.

Although every state may request different information to incorporate a company, let’s go over the information that is commonly requested.

Corporate name

The corporate name represents the actual name that you’d like to give to your company.

The corporate name must also include the necessary abbreviation or identifiers such as “Inc.” or “Incorporated”.

To ensure that your company name does not infringe on another company’s name, you should conduct a preliminary name availability search before submitting your incorporation template forms.

Business purpose

When submitting your business incorporation documents, you’ll need to specify your business purpose.

In other words, what is your company going to do?

You can have a general-purpose company allowing you to conduct any lawful business activities.

You can also have a specific-purpose company where your company will focus on specific business operations.

Registered agent

In most U.S. states, you are required to have a registered agent when filing your documents of incorporation.

A registered against is a company that receives your legal and tax documents, has a physical address in the state of incorporation and is available during business hours.

Many companies will use the services of registered agent companies offering such services for a fee.

Incorporator

The incorporator is an individual or a legal entity filing the documents required for incorporating a company.

In most U.S. states, the incorporator’s name and address must be identified.

The incorporator is the representative of the company.

Authorized stock

Your document of incorporation must outline and describe the company’s share capital and how many shares it is authorized to issue.

An incorporated business is a legal entity authorized to issue stocks to shareholders.

A company can be authorized to issue a certain number of shares but is not obligated to issue all of its authorized shares.

The authorized stock is the number of shares available to a company to issue to shareholders.

A company share’s par value is the minimum share value.

Par value is different from the market value.

A par value can be designated to be any amount such as $1.00 per share or even “no par value”.

The market value is the actual market value of the shares or how much investors are willing to pay to purchase shares.

Companies can issue common shares granting the shareholders are the rights associated with a company’s stock.

A company can also include different classes of shares or preferred shares in its incorporation documents.

Preferred shares will generally grant shareholders preferential rights while taking away other rights.

For example, a preferred shareholder may get preferential rights to dividends and in exchange will have no voting rights.

Directors

When you file for incorporation, you’ll need to designate your company directors.

The company directors are the individuals in charge of running the company’s business operations and making important decisions for the company.

Generally, the directors are elected by the company shareholders.

Officers

Filing incorporation papers also require a company to disclose the name of its officers, such as the present, vice-president, treasurer and secretary.

The officers are in charge of the company’s day-to-day operations.

Company address

Your articles of incorporation template must also include your company’s address.

This is where your company’s headquarters or main address is located.

How to file incorporation papers

The benefit of incorporating a company is that shareholders will have limited liability with respect to the operations of the business.

To incorporate a company, you need to file your incorporation papers.

This means that you need to draft your articles of incorporation and submit it to the state or provincial corporate registry.

In your incorporation papers, you’ll indicate your company’s registered office, any other office locations, how many shares will be issued and who is the incorporator.

When filing your articles of incorporation, you are required to pay an incorporation fee that will depend on the state, province or federal government managing the incorporation.

If you are looking to start a business, one of the first things you need to think about is the proper drafting and filing of your company’s articles of incorporation.

Choose your company jurisdiction

The first thing you should do is to select the jurisdiction based on which your company is going to be formed.

In Canada, a company can be formed under provincial or federal laws.

In the United States, a company can be formed under state laws.

The state of Delaware is a state having favourable company incorporation laws and many individuals and businesses choose to incorporate in Delaware.

Choose your company legal status

Once the jurisdiction is determined, you’ll need to determine the legal status of your company.

Your company may be a for-profit business, a non-profit, a partnership or a professional organization.

Depending on the legal status of your company, your articles of incorporation will need to be adapted to reflect your company’s legal status.

Choose your company name

The next step is to choose your company name.

Your company name must not infringe on the name used by other businesses.

Typically, a name search should be done to ensure that the company name you choose to incorporate will not cause confusion with other legal entities.

In some jurisdictions like in Canada, you may incorporate a numbered company.

In other words, the company will not have a name but a number assigned to it by the corporate registry.

Corporation identifiers

You need to make sure that your company has a proper corporate identifier.

For incorporated businesses, you’ll generally see the identifiers “inc” at the end of the company name.

Depending on the rules applicable to the incorporation of your business, you may also have the following identifiers in your name: “incorporated”, “corp”, “corporation” or “company”.

Filling out the incorporation forms

Now you need to prepare all your incorporation papers as required by the corporate registry from whom you will ask the company to be incorporated.

What is included in the incorporation documents of a company?

The articles of incorporation are required to set out the classes of shares the company is authorized to issue, the rights associated with the shares, rights to dividends or the right to receive any property in the context of a liquidation.

Filing incorporation documents

When you first incorporate a company, you must draft your company’s articles of incorporation and submit it with your incorporation application.

The articles of incorporation form will vary from each state or province.

Once the relevant company registry approves your incorporation request and incorporation documents, including the articles of incorporation, your company will be legally created.

The corporate registry will keep on record the approved articles of incorporation.

In case you lose your articles of incorporation or need to get a copy, you can request a copy of your articles by submitting a request to the corporate registry of where your company was initially formed.

Subject to a fee, the corporate registry will send you a copy of your articles of incorporation they have on fine.

Incorporating in the United States

Every state in the United States will have a different requirement concerning company incorporation and articles of incorporation.

To make it easier for you, we have compiled the list of the states where you can submit your incorporation forms:

You can access the corporate registry for information on how to file articles of incorporation and incorporation forms.

Incorporating in Canada

In Canada, a company can be incorporated at the federal level or the provincial level.

Whether you incorporate a federal or provincial company, you’ll need to register your corporation with the province or territory in which you will conduct business.

We have compiled a list of the provincial registrars so you can get information on articles of incorporation and incorporation forms:

You can also access Corporations Canada, the federal government’s corporate registry, to incorporate a federal company.

Payment of incorporation fees

Once the incorporation papers are filed with the corporate registry, you’ll need to pay the incorporation fees associated with the type of company you are looking to form.

The incorporation fees can vary per jurisdiction.

Once these steps are accomplished, the corporate registry can complete the incorporation of your business and send you a certificate of incorporation.

List of incorporation documents

Incorporating a business is not complicated but requires that you adequately prepare yourself and ensure you gather all the documents needed to get the job done.

In this section, we’ll go over the main incorporation documents you need to incorporate a business.

Name reservation form (Corp & LLC)

Both corporations and limited liability companies must do a name search before filing their incorporation documents.

Every business must operate under a unique business name.

This is important so that clients, suppliers, vendors and those dealing with your company do not confuse your company for another.

In most states, the secretary of state offices offer an online name search tool allowing you to validate whether or not the name you intend on using for your corporation or LLC is available.

Articles of incorporation (Corp)

C-corporations and S-corporations will need to file their articles of incorporation to start their existence.

Once you file your articles of incorporation and pay your filing fees, you will receive a certificate of incorporation or certification of your articles confirming that you are eligible to conduct business under that entity.

Articles of incorporation are applicable to corporations only.

Corporate bylaws (Corp)

Corporate bylaws represent internal rules governing how a company is to operate.

The bylaws will outline how directors, shareholders and officers interact, split control among themselves and can contribute to managing the company affairs.

This is applicable to corporations only.

Meeting minutes (Corp)

Corporations are required to keep records of their decisions and affairs.

This is done by keeping meeting minutes.

Meeting minutes are used to document the decisions of the company and how such decisions were made.

In meeting minutes, you’ll generally have the date of the meeting, who was present, what decisions were adopted, who voted for or against the resolution and so on.

Meeting minutes apply to corporations but limited liability companies can surely benefit by documenting their decisions as well.

Articles of organization (LLC)

Articles of organization for limited liability companies are the equivalent of articles of incorporation for corporations.

Just like articles of incorporation, the articles of organization are used to formally establish a limited liability company.

In your articles of organization, you’ll need to identify the company’s registered business address, the purpose of the company, the name of the members and managers, registered agent and so on.

The filing of articles of organization is applicable only to limited liability companies.

Operating agreement (LLC)

Articles of organization represent a document applicable to limited liability companies where the members outline the structure of their company along with how they will manage the company’s operations.

An operating agreement typically contains aspects relating to how the company will be managed, the rights and responsibilities of the members and the managing partners, how members are admitted or leave the company, dissolution procedures and more.

Articles of organizations apply strictly to limited liability companies.

Stock certificates (Corp)

Stock certificates are issued by corporations able to issue shares.

For example, C Corps and S Corps can issue shares to their shareholders.

A stock certificate is a document proving that a person is the holder of the designated shares in a company.

On a stock certificate, you’ll have the name of the company, name of the shareholder, number of shares, share issuance date, par value, certificate number, the signature of a company’s representative and the company’s seal.

Shareholder agreement (Corp)

A shareholder agreement is not mandatory but can be quite important for corporations issuing shares to many shareholders with voting rights.

The shareholder agreement outlines the obligations of shareholders between themselves and the company.

For example, shareholder agreements will outline how the shareholders can transact their shares or restrictions on the share transfer, payment of dividends, voting rights and so on.

Annual report (Crop & LLC)

Both limited liability companies and corporations must issue their annual report.

For a company to have the ongoing approval to conduct business in a state, it must file its annual report on a yearly basis.

The information on the annual report is pretty simple and basic but each state may request different information.

Form S-2553 (S-Corp)

Another company incorporation document that is important to keep in mind is the Form S-2553.

This is a tax election form used to elect the tax treatment applicable to S-corporations.

If your company meets the S-Corp requirements, by filing the S-2553 Form, it can elect to be taxed in a different way than C-Corporations.

Takeaways

Articles of incorporation are important company documents needed to form and create a company.

Once you receive your articles of incorporation, you should file it in your corporate minute book.

When incorporating a business, you must draft your company’s articles of incorporation and file it with your incorporation forms.

The company’s articles of incorporation provide for some general information about the business such as:

Corporation name
Type of corporation such as a for-profit corporation, non-profit and professional
Corporate abbreviations such as Inc., Corp., Co., Ltd., Limited, Incorporated, Company and Corporation
The name of a registered agent, if any
The purpose of the corporation to be formed
The classes of stock or shares the company can issue
How many shares of each class of stock the company can issue
The incorporator’s identification
The effective date of the incorporation

Depending on where you are incorporating your company, there may be slight variations in the information and content of the articles of incorporation but the substance is the same.

Once the articles are approved, the articles will represent the legal backbone of the company particularly with respect to the company name, date of incorporation and classes of shares or securities that the company can issue.

You can handle the company incorporation yourself or consult with a corporate lawyer to help you.

Have you ever incorporated a company yourself?

If so, what was your experience?

We would love to hear from you, drop us a comment!

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