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 a particular state office. In most states, the document is known as the articles of incorporation, and in most states it needs to be filed with the Secretary of State. However, your particular state may have a different name for the document (for example, “certificate of formation”) or a different state office where it needs to be filed (in Maryland, the State Department of Assessments and Taxation; in Arizona, the Arizona Corporation Commission). Virtually every state has a downloadable form that meets the state’s minimum requirements for articles of incorporation.
There is variation among the states, but 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.
Corporation Name. Providing the name of your corporation may seem simple. However, you must make sure that the name you provide doesn’t conflict with the name of a preexisting business that’s already registered in your state. For example, if you submit articles of incorporation for a company named Bassoon Lagoon, Inc., and there is already a Bassoon Lagoon, LLC in your state, your filing will be rejected. To avoid rejection, you will need to do a search of business names already registered in your state. This is typically a simple process that you can take care of online through your Secretary of State’s website.
Principal Place of Business. This is simply the main location for your business. For many small businesses, it will be the one and only business location. You may be specifically required to provide a street address. (Some states do not require any business address information.)
Registered Agent. A registered agent is someone who you designate to receive official papers for the corporation. These may 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 may well 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 may choose to appoint either a separate individual, such as a lawyer, or a company to act as your registered agent. (For more information, check What is a Registered Agent.)
Statement of Purpose. Most states do not require you to be specific about the purpose of your corporation, and it is 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. The duration is the length of time, in years, that your corporation will operate. Many states do not ask for a specific duration in the articles of incorporation, and states that do ask for it often do not require you to provided a limited duration. Instead, you may choose that the duration be “perpetual.” Moreover, in many states, if you do not provide a duration, it is assumed by default that the duration will be perpetual.
Authorized Stock. You are 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 issues more than one class of stock. Be aware that the number of authorized shares is not the same as the number of shares actually issued; you may choose to authorize more shares than you will 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 may in part depend on the number of authorized shares, and 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, there very likely will be no need for you to authorize more than 10,000 shares. (You can authorize more shares later, if necessary.) Classes of stock generally relate to different shareholder rights and 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.
Incorporator's (or Officers’ or Directors’) Names and Addresses. An incorporator is a person or company that is responsible for incorporating a business; an incorporator is not necessarily the same as a corporation 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. For many small businesses, there will be just one incorporator. However, where there is 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, and 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 up to around $1,000. For more details, you should check with the Secretary of State’s website for your state.
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 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 the 50-State Guide to Forming a Corporation. And, if you want even more detailed explanations regarding articles of incorporation or related corporation matters, check Legal Guide for Starting & Running a Small Business, by Fred Steingold (Nolo) and The Small Business Start-Up Kit: A Legal Guide, by Peri H. Pakroo (Nolo).