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Articles Of Incorporation Explained
When the owners of a business decide to incorporate their company, as part of the incorporation process they are required to produce a legal document called it's "Articles Of Incorporation". A company's Articles effectively define the framework or rules within which the business will operate from a legal perspective.
A company’s Articles of Incorporation set in stone the structure and purpose of an incorporated business. The legal document is drawn up and submitted at the time of incorporation. The reason for the existence of articles of incorporation is to provide a framework of rules in which the company must operate.
Standard articles of incorporation will include specific details on the name of the person(s) incororating the company, whether or not the new coporation will be a stock or non stock organisation, and if a stock organisation, details on the amount and type of authorised share capaital the company can issue.
Also required is the address of the company’s registered office, the names of the board of directors and the accounting period the business will use for reporting purposes.
The business’s articles will also define the main activities of the company. Your articles will also state the full name of your new corporation.
You can choose whether to use the words “Incorporated”, “Limited” or “Corporation”, or you can legally use abbreviations such as “Inc”, “Ltd” or “Corp”.
And last, your Articles of Incorporation must include all specific state rules and by-laws that will affect the officers of your company, and your employees.
If you’re looking to incorporate your business, articles of association are one of the mandatory documents that must be filed as part of the incorporation process.
Depending on the complexity of your organisation’s structure and activities, you can either hire a lawyer or incorporation specialist to produce your articles, or you can prepare them yourself and file them online using an online incorporation service.
Obviously, writing your own articles and filing them online will usually be cheaper than hiring a professional. If you’re not familiar with the format and contents of legal documents, it’s probably advisable to hire an expert as it’s imperative that you get your Articles of Incorporation correct as they will determine how your newly incorporated company operates.
If you get them wrong, you may delay the incorporation process or incur additional costs correcting the errors.
If however you feel comfortable in the preparation of your own documents, you will find lot’s or sample articles of incorporation online, that you can use to create your own.
Local libraries will also have examples of articles of incorporation that you can use. Whichever sample articles you choose to use, you must ensure that the document is complete and complies with the legal requirements of the state you are to incorporate in.
Each State has different requirements and by-laws that you must comply with. Each separate article included in your document should be clear and concisely worded.
To ensure your document is suitable for filing, you should ideally pay a flat fee to a local attorney to have it checked for accuracy and completeness. This will avoid delays in the incorporation process further down the line.
Once you are sure that your Articles of Incorporation are ready for filing, you will need to obtain the relevant form from the secretary of state for the state you are incorporating in.
These days, the secretary of state’s website will usually have forms which you can download.
Once filed, your articles of incorporation document effectively creates your new corporation as a separate legal entity.