If you have decided to start your own business, and have determined to form a corporation rather than another type of legal business entity, you will need to create articles of incorporation for your new business. The articles of incorporation will be filed with your state to officially form a legal business entity.
Articles of incorporation officially establish a new business in a state. In contrast, corporate bylaws are not actually filed with the state. Instead, corporate bylaws establish the rules and regulations the corporation agrees to follow internally.
Bylaws also identify the number and roles of members of the board of directors and officers and establish how, and when, shareholder meetings will be conducted.
The two documents have some overlap of information and work together; however, they are separate and distinct legal documents. Both are important for any type of corporate entity.
The articles of incorporation for your corporation must include certain key pieces of information. While the specific information may vary slightly from state to state, depending on where you choose to incorporate, there are some constants.
Be prepared to record the following information:
As previously mentioned, your articles of incorporation must identify the name(s) and address(es) of the incorporator(s) for your new business. In some states, the incorporator is called a "promoter."
The incorporator is responsible for bringing together the people with the idea for a product or service that the corporation will offer, and the eventual shareholders who have money to invest in the new startup business.
Every state requires corporations to have and list at least one incorporator on their articles of incorporation, although it is also acceptable to have multiple incorporators.
In addition to connecting the shareholders with the business itself, the incorporator is also responsible for putting the initial board of directors for the company in place and, in some states, for officially adopting the corporate bylaws.
After the corporation has officially been formed with the state, and a board of directors is in place, the incorporator's role is essentially over. As the job is a short-lived role, it lends itself well to this type of business relationship. There are a variety of companies and individuals engaged in the business of incorporating other peoples' companies as professional incorporators.
If you choose to work with a firm that offers its services as a professional fiduciary, be sure that the terms are clearly established at the beginning of the relationship. Your services agreement should state that the professional incorporator will resign once the corporation has been approved by the state. At that point, the incorporator should no longer have any rights in, or any responsibilities for, the new corporation.
Most states offer standardized, fill-in-the-blank forms that business owners can use to provide the minimum level of information the state needs in order to approve the new business entity. While it may be tempting to simply use the form provided by the state because it will save a little bit of money, do so at your own risk.
The following reasons are why you should consider drafting your own articles of incorporation:
Most business owners find that it is worth the small time commitment, effort, and nominal expense to create and file articles of incorporation tailored to their business, rather than using a one-size-fits-all form provided by the state.
Articles of incorporation are designed to give the state information about your new business, but they are also designed to provide information to the public. Articles of incorporation, once filed, are available for viewing by the general public. In many states, this information is readily available online through the Secretary of State’s (or other state division’s) public website.
Creating the articles of incorporation for your new business is the first step in being able to transact business in the state under the corporate name. Here is what you can expect after you create your legal document:
After you have established your corporation by filing articles of incorporation, you may find that the information you initially provided changes over time.
Certain changes must be reported to the state, by officially amending your articles of incorporation with the state, by completing a state-specific form, or in some cases by filing a corporate resolution with the state. For example, if your principal place of business or registered agent changes, you will need to notify the state of the change. In states where corporations are required to report the names and other information about the board of directors or officers for the corporation, changes to that information must be reported as well.
Some states include filing fees in order to make these types of changes, while others simply require that corporations file documents evidencing the change. Corporate officers and directors should be aware that there may be time constraints or requirements for filing these types of updates, which vary from state to state.
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