What is an article of incorporation? Great question business builder! It’s an important document that gets filed with the state to establish your business.
As you know, not every business operates with the same level of integrity and professionalism. Last year, 4.4 million startups were formed.
The question is, did they lay the proper legal groundwork for their new business?
Let’s make sure you’re doing things right from the start of your business birth. Read on to discover what incorporation entails, how to do it, and why it’s important for the launch of a startup company.
What Are Articles of Incorporation?
If you’ve been trying to define an article of incorporation, look no further. Simply put, it’s a document that must be filed with your state before starting a business.
Here are some of the details that must be included in an article of incorporation:
- Company name
- Company address
- Name and address of the registered agent
- Company purpose
- Company structure
- Names and addresses of the board members
- Company shares that will be issued
- Name and address of the incorporator
When drafting your company purpose, try to remain as broad as possible. You don’t want to pigeonhole yourself into a corner; you’ll want to leave room for growth.
How Do I Start the Process?
In the United States, articles of incorporation are filed with the Office of the Secretary of State where you choose to operate.
There are many people who can help you file your article of incorporation. Don’t get overwhelmed by the process.
There are also many ways to refer to an article of incorporation, including:
- Certificate of incorporation
- Letters patent
- Limited company
- Limited liability company
Business incorporation can be simple or complex. In fact, some states even allow entities to file online if they’re straightforward enough.
However, the more complex they become, the greater the need to hire an attorney. For example, if there will be multiple board members, a complex infrastructure, or a high potential for profit, then allow an attorney to draft an equitable agreement.
Benefits of Incorporation Laws
Whether you’ll be a small business or a billion-dollar business, you’re still investing a lot in your new venture. Here are some of the benefits of filing for businesses.
In a terrible turn of events, should you ever be sued or enter into major debt, your liability will be limited. As the incorporator, you won’t be on the hook in the same way a sole proprietor might be.
Lower Tax Rates
The amount of money you can write off during tax season depends on the nature of your business and how much revenue you generated.
In many ways, incorporating your business can also save you from double taxation. This tends to occur if a solo entrepreneur doesn’t incorporate his or her business.
When potential clients see that little “LLC” after your name, it boosts your credibility. They’ll know you’ve filed state papers and can offer a certain level of professionalism and security. It also suggest that your business is insured, or at least protected by business bankruptcy options if things go south.
The same goes for potential investors. You can almost guarantee they’ll be more interested in an incorporated business rather than one that can’t offer the same assurances.
Start Your Business Today
We hope this has stopped your Google search for, “What is an article of incorporation?” It’s a document that can be as easy as an online form or as complicated as large legal fees with mounds of paperwork.
Either way, take the time to do things right from the beginning with your business. You’ll be protecting your business from inception to growth.
As you continue to make all the right moves, we invite you to keep coming back to visit our biz blog. Each new article on Everything Entrepreneur is posted with your success in mind.