Articles of Incorporation: Why They Are Important at the Outset

One of the first steps when beginning to establish your business is to prepare your Articles of Incorporation. But what does that mean? Where do you start? What needs to be included in your Articles of Incorporation? No need to panic, we’re here to answer your questions in a way that you can easily understand. 

What are Articles of Incorporation?

Articles of Incorporation formally document the basic information required to form a corporation. In simpler terms, your business’s Articles of Incorporation should detail the who, what, where, when, and how of your business. 

What do I need to include in my Articles of Incorporation? 

Your Articles of Incorporation should include a number of details about your business. The following can serve as a guide for what to include:

  • Full Name of Corporation: This should be the official name of your unique business entity. No two businesses can share the same legal name within the same state. 
  • Principal Place of Business: This is your official business address. 
  • Registered Agent: Your business’s registered agent is an assigned representative that receives important legal notices on your business’ behalf. 
  • Business Purpose: Why is your business being created?
  • Stock: This should include the total number of shares issued in addition to the face value of the stock. You should also include a stock certificate when issuing stock in your company. 
  • Incorporator: The incorporator of your business is the person who is setting up the corporation. They must be 18 years old or older. 
  • Director: The director of a business is the person or people that will oversee the overall affairs of the business. 
  •  Officer: Officers include the person or people that will manage the day to day operations of the business. They include the President, VP, Secretary, etc. 
  • Duration: The duration represents how long the corporation will exist. Usually, the duration is set as “perpetual,” meaning that there is no specified end date. 
  • Filing-fee: The filing fee is a one-time payment when you initiate the filing. It ranges from $30-300. In the state of California, the filing fee is $30. 
  • Franchise Tax: A franchise tax is an annual amount a business is required to pay. It is based on the company’s net worth and how much capital they hold. Corporations can compute their tax by multiplying their net income for the year by 8.84% times their net income for the year. 
  • Email Address: A primary email address should be identified to serve as the point of contact for business information. 
  • Effective Date: The effective date is the date that your business officially becomes a corporation. It must be within 90 days of filing your Articles of Incorporation. 
  • Limitation of Director’s Liability: Some states allow for the liability of the director of a business to be expanded, limited, or in some cases, eliminated entirely. 
  • Tax Closing Month: The closing month of the accounting year is the last month of your accounting year or tax year. An accounting or tax year is usually 12 consecutive months, based on either a calendar year or a fiscal year (including a period of 52 or 53 weeks).

Why do I need Articles of Incorporation?

Filing Articles of Incorporation is a required step when establishing a corporation. If you have made the decision to establish a business entity as a corporation, drafting and submitting Articles of Incorporation is a requirement to have your business legally recognized and registered as a corporation. 

How do I properly format my Articles of Incorporation?

We’re making this easy for you by providing a free template download. It doesn’t get much easier than downloading a template and filling in your company’s information. 

How do I file my Articles of Incorporation? 

Once your Articles of Incorporation are completed and ready to be submitted, you can begin the filing process. Articles of Incorporation get filed to your state so the process varies slightly based on location. In the state of California, you can either submit your Articles of Incorporation by mail, in-person or electronically

If you are forming a business entity and need support in drafting and submitting your Articles of Incorporation, our team of experienced legal experts is here to help. Contact @VirtualCounsel for a free consultation to get your business started.

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