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Articles of Incorporation – Importance, Requirements & Procedure

Articles of Incorporation are a series of government papers that constitute a firm’s foundation in the Canada and United States. To be officially recognized as a business, one must submit these papers to the State department or firm registrar.

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articles of incorporation

Are you someone who wishes to become a successful entrepreneur? You may have a lot of dreams and plans regarding it, but officially starting a business calls for more than that. 

To build a corporation in USA or Canada, one needs to issue an authorized document known as the AoI, articles of incorporation. This document should be approved by the local state secretary. As soon as the state passes your filing, your corporation gets officially established.

What Are the Articles of Incorporation?

Articles of Incorporation are a series of government papers that constitute a firm’s foundation in the Canada and United States. To be officially recognized as a business, a firm must submit these papers with the State department or firm registrar in the jurisdiction in which it wishes to operate. Because of their attractive regulations and taxes frameworks, several jurisdictions, such as Delaware and Nevada, draw a high number of enterprises wishing to incorporate.

The title of the business, the kind of business model, the authorized agent, the number of authorized shares, and the initials and signings of the business’s shareholders are the crucial parts of the Articles of Incorporation.

Importance of Articles of Incorporation

importance of articles of incorporation

Here are some points that state the importance of Articles of Incorporation:

Foundation of everlasting existence

Everlasting existence defines that the business will remain working in the long run even if the founders and managers leave or die. Companies gain a  permanent position rather than the un-incorporated firms which can easily be disbanded. Registration also enables the acquisition of the firm’s ownership to some other organization.

Tax benefits

Establishing a corporation in some jurisdictions entitles companies to tax breaks on a few of their operational expenses. Production costs, wage costs, insurance payments, pension benefits, and lastly, investments in clean power are all examples of these expenditures. The tax decreases significantly reduce the business’s total tax liability.

Security from obligations

A registered firm works separately. This means that the personal assets of the founders or owners are secured from corporate liabilities.

For instance, if the business owes cash to creditors, it can’t auction off the shareholders’ possessions, such as homes, cars, and banking information, to cover the outstanding debt. Nevertheless, if the company functions as a non-established company, the shareholders risk losing their personal property to cover business debts.

Improved corporate image

Running a firm as a corporation increases the firm’s legitimacy and trust. Consumers are likely to trust companies that include the words “Inc” or “Established” at the end of their trademark. Operating as a corporation also aids in building the support of banks and investors looking to fund or invest in the firm.

Information Required in Articles of Incorporation

The sensitive data shown in the AoI vary by state, however, hereunder are the standard details:

Title of corporation

Businesses that apply for establishment must specify the name under which the company will operate. To distinguish the firm from non-established enterprises, the title should include the terms “Inc” or “Incorporated.”

Registered agent’s name & residential address

The contact details of the individual who will collect important files and legal documentation on behalf of an organization must be provided in the corporate application for establishment. Throughout normal office hours, the company must select someone who can be reached on all occasions. Firms operating outside of the jurisdiction in which they are incorporated typically use a registered agent agency to collect official correspondence on their account.

Corporation types

The sort of business that the company wishes to establish should be disclosed. Non-stock companies, stock organizations, and non-profit corporate entities are the three primary forms of corporations. Distinct fees relate to specific kinds of companies.

Fields of processes for the business

Based on the scope for which the business is founded, each state has its own set of requirements. The companies are required to report what it sells and the nature of the business it operates.

Name and residential details of the initial directors

The company must furnish a record of all elected directors who administer the entity, as well as their addresses. The contact details of top executives including the presidents, vice presidents, secretaries, and accountants may also be included on the list.

Corporation Duration

The business must state if it will be open indefinitely or for a limited time

Incorporator’s name and address

The incorporator is none another than the official in control of forming the business and drafting the registration papers. An incorporator is eligible to file the AoI with the jurisdiction in which the business is registering, as well as deliver any other paperwork mandated by law until the company is fully established. Once the company is formed, this official has no more official tasks.

Requirements for Articles of Incorporation

These are the following requirements that one should meet before filing for the AOI:

Fee and Application

When filing for incorporation with the state’s secretary, or registrar, the incorporator must issue the application papers and submit the asked fee in the principal address’s state. The cost of the filing fee can lie anywhere from around $50-$500, based on the kind of business, and the jurisdiction it is established in. Printed forms can be availed by the incorporators at the office of the State Secretary or can be downloaded via the registrar’s site.

Mandatory provisions

Is necessary that the information present in the AoI should match with all the state statutes and laws on the establishment of businesses. Amongst the list of several provisions of the AoI, some are, address details of the business, its name, reason representing the purpose why is the business getting established, incorporation duration, etc. All the provisions shall be met by the incorporator to get approval for his/her business.

How to File Your Documentation for Articles of Incorporation

Obey these below-mentioned steps to register your AOI:

Figure out how to register.

You can submit AOI immediately with your provincial secretary of province’s office, by legal aid website, or with the help of an attorney. Immediate filing is normally less expensive than the other alternatives, but if you do it manually and have concerns, you may consider legal aid resources or personal lawyer advice to be worthwhile. Once you’ve made your decision, start writing your articles.

Indicate the company’s name.

The first AOI is just your business’s name. Before registering, write the entire firm name you’ve settled on.

Include the business’s address.

Your 2nd article will be about your major business address, which will most probably be a shop or an office. If you have many sites, you must list your primary location.

Designate an authorized agent

In your 3rd article, you’ll include the address and name of your authorized agent. If your authorized agent isn’t one of your workers or shareholders, include your agent’s location instead of your business’s.

Create a general vision statement.

Your 4th article is a special purpose declaration. It’s vital to emphasize the word “generic” — it’s ideal not to be too precise about your goal. Instead of outlining your services and goods, employ terms that enable your business’s array of services and goods to vary.

Determine the total number of authorized company shares.

Because all businesses have owners, state how many authorized shares you want to sell in your 5th AOI. The quantity you specify can be larger than the total you release, but your registration expenses may rise as your authorized share count rises. If your government needs you to disclose the stock categories your firm will release, you should consult with an attorney to determine the best choices for your firm.

List the names and locations of your directors and incorporators.

Your incorporator’s and directors’ addresses and name will be listed in your 6th and 7th articles. Extra sheets of data can be attached to your AOI to incorporate all of your incorporators and directors.

Determine the lifespan of your company.

If you want your business to last forever, write “The term of this business is eternal” in your 8th article. If not, enter your company’s term and finish dates.

Obtain the initials of all the incorporators.

Finish your AOI by gathering all of your incorporators’ initials and dating the final part of your AOI. You are now likely to submit your articles.

When To File for Articles of Incorporation

Before you start taking measures to file your Articles of Incorporation, you may think about when is the right time to do it? Don’t worry, we are here to help you understand the right time when you should file your AOI:

You will have to ask yourself the following questions before you start the AOI filing process:

What will be the type of business entity I’ll be starting?

Ask yourself what is the type of business entity you wish to start. Usually, AOI is best suited for C and S corporations, and not for partnerships, LLCs, sole-proprietorships, or any other business entity.

What should my company name be?

Decide the name of your company and ensure it is unique and is different from all the other firm names. Another basic rule of choosing a firm name is that you’ve to add “Corp” or “Inc”, at the end. As soon as you pick a name, find your state’s corporate name database to check no same names are present. Then reach out to your chosen agency, reserve the title, and file your AOI.

Making Changes and Amendments to Articles of Incorporation

It is a sad fact, but these articles need amendment from time to time. However, to everyone’s luck, amending these articles isn’t a tough process. The amendment process of articles of incorporation is just like the amendment process for any government paperwork. The common fact about amendments is that a huge chunk of the association should be in the favour of getting an amendment approved. This fact remains unchanged for articles of incorporation as well.

The main difference between the amendment of AoI and other documents is that an extra step is needed in several states. There are some states in which the amendment present in the articles of the amendment should be filed with the original AoI with the state in which the business is incorporated.

Conclusion

We have reached the end of this article, and our aim here was to make you understand what exactly is an Article of Incorporation, what are the needed documents for it, how to file an AOI when to file it, and how can changes be made to it. If you have any doubts or need any kind of business assistance, feel free to contact us at ODINT Consulting.

FAQ’s

The AOI consists of your corporation’s title, address, and the purpose of your business establishment in that particular state.

AOI is necessary as it leaves you with tax advantages, and a good corporate image, and also makes you free of any kind of liability.

Yes, the government treats AOI, and all other related papers, as public documents and can be accessed by anyone in the public.