What is Articles of Incorporation and how does it differ from other legal documents?
The Articles of Incorporation are an important legal document for any company that wants to incorporate in the United States. This document serves as the foundation for the company’s business operations and is essential to establishment of a proper legal structure. But what exactly is Articles of Incorporation, and how does it differ from other legal documents? In this blog post, we will explain the purpose of this document, its notable features, and how it compares to other related business documents. Read on to learn more about the importance of Articles of Incorporation and how they can help protect your business!
What is Articles of Incorporation?
Articles of incorporation, also known as a corporate charter, are a document that is filed with a state government when incorporating a business. The articles of incorporation state the company’s name, its purpose, how long it will exist, its shareholders, and who will manage the company. The articles of incorporation must be approved by the state in order for the company to be officially incorporated.
While many businesses will have similar articles of incorporation, there are some key ways in which they can differ. For example, some businesses may choose to include provisions in their articles of incorporation that limit their liability in the event that the company is sued. Other businesses may include language that allows them to change their corporate structure in the future if they so choose. Ultimately, the contents of a business’s articles of incorporation will be unique to that particular company and should be tailored to fit its specific needs.
The Different Types of Articles of Incorporation
There are different types of articles of incorporation depending on the business’s needs. The most common types are the standard, non-profit, and foreign articles.
The standard articles are the most basic and simple type of articles. They include the company’s name, address, and contact information. The standard articles also include the names of the incorporators and the purpose of the company.
The non-profit articles are for organizations that have a charitable or educational purpose. These types of articles must state that the company is a non-profit organization. The non-profit articles also include the company’s name, address, and contact information. The names of the incorporators and the purpose of the company must also be included in these types of articles.
Foreign articles are for companies that are incorporated in a state other than where they do business. Foreign articles must include the name of the state where the company is incorporated and registered to do business. They must also include the company’s name, address, and contact information. The names of the incorporators and the purpose of the company must also be included in these types of articles
How to Draft Articles of Incorporation
If you are starting a corporation, you will need to draft and file articles of incorporation with your state’s secretary of state. The articles of incorporation are also sometimes called the certificate of incorporation or the corporate charter. The articles of incorporation must include the following information:
The name of the corporation
The corporation’s address
The names of the directors
The purpose of the corporation
The number of shares that the corporation is authorized to issue
The articles of incorporation must be signed by the incorporators and filed with the state. Once the articles of incorporation are filed, the corporation is officially formed.
Pros and Cons of Incorporating
When you’re starting a business, you have to decide which legal structure is right for you. Should you incorporate? If you do, what kind of company should you form—a corporation or an LLC?
The answer to these questions depends on many factors, including the size and type of business, how many shareholders or owners there are, and whether the owners want to be personally liable for the company’s debts.
Incorporating has several advantages:
1. It protects your personal assets. If your company is sued or can’t pay its debts, your personal assets such as your house, car, and bank accounts are protected. This isn’t the case with sole proprietorships and partnerships.
2. It makes it easier to raise money. Banks and investors are more likely to lend money to or invest in a corporation than in a sole proprietorship or partnership. That’s because they know that their investment is protected if the company can’t pay its debts.
3. It gives your company a professional image. A corporation looks more credible to customers and suppliers than a sole proprietorship or partnership does. This can help you win customers and get better deals from suppliers.
4. It makes it easier to transfer ownership of the company. If you want to sell your business, it’s much easier to find buyers for a corporation than for a sole proprietorship or partnership.
Conclusion
Articles of Incorporation are an essential legal document for any business. They establish the identity, purpose and legal status of a company, as well as outlining its internal structure and rules. Taking the time to understand what this document contains can help ensure that you set up your business in accordance with the law and protect yourself from potential future issues. Other documents such as Bylaws or Operating Agreements may also be necessary when creating a new business entity, so it is important to consult with a lawyer or other professional advisor if you have any questions about which documents are required in your situation.