What Are Articles of Incorporation (and Why Should I Care)?

If you’re starting a business or organization, you’ll come across a lot of unfamiliar legal terms. One of these is “articles of incorporation”, and you might be wondering what they are and why they’re important. Put simply, an article of incorporation is a document filed with the state that officially creates the business or organization.

By filing articles of incorporation, you’re essentially setting the foundation for your company. This document outlines the business’s purpose and sets forth information on how it will be managed and its internal organization. Depending on the state you want to register in, an article of incorporation may also spell out key information such as how many shares of the company or organization can be issued, what kind of directors it will have, and what the company or organization’s registered agent will be.

Why Do I Need an Article of Incorporation?

When you set up a business, an article of incorporation helps ensure the protection of the entity’s owners and members. It also serves as evidence of your company’s existence, with an original copy of the articles serving as a kind of birth certificate for the business. By filing articles of incorporation, your company or organization is protected from personal liability for its debts and business decisions. This means that in the event of legal trouble, creditors and the court system will look to the assets belonging specifically to the entity, not to you personally.

Filing an article of incorporation is the first step in creating a legal entity that can exist on its own. Once filed, the company or organization can operate like any other business or organization, and can enter into contracts, raise capital, and transact other business. It’s important to note, however, that no company or organization can legally do business until the articles are officially filed.

How Do I File an Article of Incorporation?

Each state has its own filing requirement for articles of incorporation, and the filing and related fees can vary. Generally speaking, the articles of incorporation must include the business or organization’s name and purpose; the address of the business or organization’s principal office; the total number of shares of stock the business may issue; and the name and address of the business or organization’s registered agent.

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When the articles are completed and filed with the state, the business or organization is officially created. At this point, the entity can begin operating and engaging in legal activities. While the process of filing articles can seem daunting, there are helpful resources available that make it easier.

How Can I Learn More?

Ready to get started creating your company or organization? Taking the time to understand and properly prepare your articles of incorporation is the first important step. Make sure you know the filing requirements in the state where you plan to file, then take advantage of the help resources available and you’ll be well on your way.

Related Legal Concepts

The incorporation process involves several key documents and concepts that work together to establish a business entity. While articles of incorporation create corporations, articles of organization serve a similar function for limited liability companies. Upon approval by the state, these articles result in the issuance of a certificate of incorporation, which serves as official proof of the entity’s legal existence and completes the incorporation process.

The Bottom Line

Articles of incorporation are essential foundational documents that legally establish a corporation and provide crucial liability protection for business owners. Understanding the requirements and process in your state is vital for proper business formation. For guidance specific to your situation, always consult a qualified, licensed attorney.