Articles of Incorporation

If you want to structure your business as a corporation, one of the first formal steps you'll need to take is to file a special document with the state you want to incorporate in. In most states, the document is known as the "articles of incorporation."

What Are Articles of Incorporation?

A corporation's articles of incorporation is its official formation document. Your state might have a different name for the document (for example, "certificate of formation").

When you form a corporation, you'll typically file the articles with the secretary of state's office or a division within the secretary of state. However, your state might require you to file it with a different office. For example, to form a corporation in Maryland, you'll file articles with the Maryland Department of Assessment and Taxation.

While there's variation among the states, most states require many, if not all, of the following pieces of information in articles of incorporation:

• the name of your corporation
• your corporation's principal place of business
• the name and address of your corporation's registered agent
• a statement of the corporation's purpose
• the corporation's duration
• information about the number of shares and classes of stock the corporation is authorized to issue
• the names and addresses of the incorporators, or of the initial officers or directors; and
• one or more incorporator signatures.

Virtually every state has a downloadable form that meets the state's minimum requirements for articles of incorporation. Many states allow you to submit your articles online.

Corporation Name

Providing the name of your corporation might seem simple. But every state has rules for corporate names.

Your corporate name must include an entity designator. Your state probably requires business names to include or end in a word, phrase, or abbreviation that designates your business as a corporation. Most corporate names must include one of the following:

• "Corporation"
• "Incorporated"
• "Company"
• "Inc."
• "Corp.," or
• "Co."

Your name must be distinguishable from other business names already registered with the state. You'll need to make sure your proposed business name is available. Your state will likely reject your articles of incorporation if your corporation's name conflicts with a name of a preexisting business that's already registered in your state. For example, suppose you submit articles of incorporation for a company named Bassoon Lagoon, Inc. However, the state has already registered a company named "Bassoon Lagoon, LLC." In that case, your filing will probably be rejected.

To avoid rejection, you'll need to search for business names already registered in your state. You can typically search through your state's business records on your secretary of state's website.

Avoid trademark infringement. Make sure your corporation's name isn't the same as or too similar to someone else's trademark. Your articles won't be rejected because your company's name is the same as another business's trademark if that trademark (or business name) isn't registered with the state. But you could save yourself time and money down the line by choosing a business name at the start that doesn't conflict with someone's trademark.

Principal Place of Business

Your corporation's principal place of business is simply the main location for your business. For many small businesses, it'll be the one and only business location. You might be specifically required to provide a street address. (Some states don't require any business address information.)

Registered Agent

A "registered agent" is a person or business that you designate to receive official papers for your corporation. These official papers might include certain notices from the state—and certainly include documents related to lawsuits.

The registered agent must be located in the state where your corporation is formed and you must provide a physical—street—address for the agent. You could decide that an officer of your corporation will serve as the registered agent, and the address will be the corporation's business location.

Alternatively, you might choose to appoint either a separate individual, such as a lawyer, or a company to act as your registered agent. Some companies exist just to provide registered agent services. Some states don't allow corporations to act as their own registered agent.

Statement of Purpose

Most states don't require you to be specific about the purpose of your corporation, and it's generally not advisable to provide specific statements. A general statement such as "The purpose of the corporation is to engage in any lawful activity for which corporations may be incorporated in this state" is usually sufficient. In many states, this type of statement will be preprinted on the secretary of state's articles of incorporation form.

If your state does require more specificity, you nevertheless should try to be as general as possible. For example, for a business that you initially expect to be focused on designing websites, consider a statement of purpose such as "To provide website design services and to engage in any other lawful activity for which corporations may be incorporated in this state."

Duration of Corporation

The duration is the length of time, in years, that your corporation will operate. Many states don't ask for a specific duration in the articles of incorporation.

However, states that do ask for it often don't require you to provide a limited duration. Instead, you can choose that the duration be "perpetual."

Moreover, in many states, if you don't provide a duration, it's assumed by default that the duration will be perpetual.

Corporation's Authorized Stock

Typically, you'll be required to indicate how many shares of stock the corporation is authorized to issue. Many states also ask you to indicate if the corporation is authorized to issue more than one class of stock.

Be aware that the number of authorized shares isn't the same as the number of shares actually issued; you could choose to authorize more shares than you'll initially issue to any shareholders.

When deciding how many shares to authorize, keep in mind that, in many states, the cost for filing the articles of incorporation can, in part, depend on the number of authorized shares. So, for small businesses, it often makes sense to authorize only as many shares as will result in the minimum filing fee. For example, if your state allows you to authorize up to 10,000 shares for a minimum filing fee of $100, you likely won't need to authorize more than 10,000 shares. (You can authorize more shares later, if necessary.)

Classes of shares. Classes of stock generally relate to different shareholder rights. For many small businesses only a single class is necessary. However, if you expect to have a more complicated arrangement regarding, for example, which shareholders are entitled to vote on mergers or receive dividends, you should consult with an attorney or other expert before deciding on share classes.

Value of shares. You might also need to specify your share's par value. A share's "par value" is the minimum legal price the share can be sold for. You can sell your corporation's shares for an amount above the par value, but you can never dip below the par value. For example, suppose you designate your share's par value as $1. Given the par value, you can't sell a share for $0.50. But you could sell a share for $2. Many states allow you to designate your stock as having no par value. In that case, you can sell your shares for any price.

Incorporator's (or Officers' or Directors') Names and Addresses

An incorporator is a person or company that's responsible for incorporating a business. An incorporator isn't necessarily the same as a corporate officer or director. Most states require you to provide the name and address of one or more incorporators.

However, in some states, you have at least the option if not the requirement to provide name and address information for corporate officers or directors. If you're required to name the corporation's officers or directors, the incorporator will generally appoint the officers and directors. If you're not required to name the officers and directors initially, then the incorporator will typically elect the directors, and then the board of directors will appoint the officers.

Most small businesses will have just one incorporator. However, where there's more than one incorporator, each incorporator generally is required to sign the articles of incorporation.

Authorized Signatures

As just mentioned, at least one incorporator needs to sign the articles. If there are multiple incorporators, generally, they all must provide their signatures along with their addresses.

Fees for filing articles of incorporation can vary widely among states, from less than $100 to up to around $1,000. For more details, see our article on how much it costs to incorporate your business

Next Steps After Filing Articles of Incorporation

Preparing and filing articles of incorporation is only one of several steps necessary to form a corporation. Other initial tasks include:

• electing a board of directors, and
• adopting corporate bylaws.

If you want further information about articles of incorporation in your particular state, as well as other steps involved in forming a corporation, check out our state guide to forming a corporation. And, if you want even more detailed explanations regarding articles of incorporation or related corporation matters, you can read Incorporate Your Business, by Anthony Mancuso (Nolo) and The Small Business Start-Up Kit: A Legal Guide, by Peri H. Pakroo (Nolo).