Notes 2 by Pamela Jane Torno
What Are Articles of Incorporation?
Articles of incorporation are a set of formal
documents filed with a government body to
legally document the creation of a
corporation. Articles of incorporation
generally contain pertinent information such
as the firm’s name, street address, agent for
service of process, and the amount and type
of stock to be issued. The articles of
incorporation are used to legally form the
corporation.
What are articles of incorporation?
Articles of incorporation, sometimes called a
certification of formation or a charter, are a
set of documents filed with a government
body to legally document a corporation’s
creation. These legal documents contain
general information about the corporation,
including the business name and business
location.
Articles of incorporation are easy to confuse
with bylaws, which lay out the rules and
regulations governing a corporation and help
establish the roles and duties of the
company’s directors and officers. Bylaws
work in conjunction with the articles of
incorporation to form the business’s legal
backbone.
Why are articles of incorporation
important?
Articles of incorporation are crucial because
they establish a company within its home
state, informing the state of essential aspects
of the business. When filing, the business
owner lets the state know the following:
 The corporation’s purpose
 Name and address of the registered
agent
 Number of authorized shares and
amounts of common stock
 Names of any incorporators
Some states also request a copy of the
company bylaws. The bylaws help keep a
corporation running smoothly by outlining the
rights and responsibilities of the
shareholders and board of directors.
As a business owner, you can benefit from
articles of incorporation in two main ways.
 Protection from debt: By making
your business a legal corporation,
business owners protect themselves
from the company’s debts.
 Ability to sell stock: After
incorporation, you can raise capital
quickly through the sale of stock. You
can outline how you’ll sell stock to
raise capital in your
company’s business plan.
What is in the articles of incorporation?
Articles of incorporation include the following
information, with some variations by state:
 The name of your business or
corporation
 The name and address of your
corporation’s registered agent (the
person or company to whom the state
government will direct all vital legal
and state documents and
communications)
 The type of corporate legal
structure (which may include a
designation of your business as a
nonprofit corporation, non-stock
corporation or other category)
 The names and addresses of all
members of your company’s board of
directors
 The type and amount of authorized
shares available to your company
(“authorized shares” means the
maximum number of shares that your
corporation may issue and may
Notes 2 by Pamela Jane Torno
include common stock and preferred
stock)
 The duration of the business (if it’s
not permanent)
 Your name, signature and address; if
you are not the business’s
incorporator, you will provide this
information for the incorporator
instead
Some companies may wish to amend their
articles of incorporation after their business
status is established. You can do this with a
restatement, also known as restated articles
of incorporation.
How do articles of incorporation differ for
a foreign corporation?
Articles of incorporation are intended for
American corporations. A foreign corporation
operating in the U.S. must instead file a
certificate of registration. This legal
document also varies in content and
application process by state.
Are articles of incorporation the same as
articles of organization?
Articles of incorporation and articles of
organization are similar filings, with one
primary difference: Articles of incorporation
are for companies looking to form a
corporation, while articles of organization are
for limited liability companies (LLCs) – an
entirely different business classification
under the Internal Revenue Code.
Establishing a business as an LLC provides
legal and financial protections to the
business owner. LLCs are usually preferred
to corporations for companies that plan to
have real estate holdings or other assets that
change in value.
Like corporations, LLCs provide tax and
liability benefits according to the stipulations
of the Internal Revenue Code. Unlike
corporations, LLCs cannot easily transfer
holdings and aren’t a good choice for those
looking to have outside investors.
Before filing either legal document, you
should review your state’s rules and
regulations. In some states, the terms
“articles of incorporation” and “articles of
organization” are used interchangeably.
NATURE
The nature of incorporation refers to the legal
process of forming a corporation, which is a
separate legal entity from its owners or
shareholders. Incorporation provides several
benefits, such as limited liability protection
for the shareholders and the ability to raise
capital by issuing shares of stock.
When a business incorporates, it becomes a
distinct legal entity that can enter into
contracts, own assets, sue or be sued, and
engage in various business activities. The
process of incorporation typically involves
filing certain documents and paying fees to
the appropriate government authority,
usually at the state or national level,
depending on the jurisdiction.
There are some advantages and
disadvantage of incorporation.
Incorporation offers several advantages,
including:
 Limited liability
protection: Shareholders are
generally not personally liable for the
corporation’s debts and obligations.
Their liability is limited to the amount
of their investment in the company,
protecting their personal assets.
 Perpetual existence: A corporation
has a continuous existence that is not
affected by the death or departure of
its shareholders. It can continue to
operate even if the ownership
changes.
Notes 2 by Pamela Jane Torno
 Ownership through
shares: Corporations are owned by
shareholders who hold shares
representing their ownership interest
in the company. Shares can be
bought, sold, or transferred, allowing
for easy ownership changes.
 Centralized
management: Corporations have a
centralized management structure.
Shareholders elect a board of
directors who are responsible for
making strategic decisions and
appointing officers to manage the
day-to-day operations of the
company.
 Regulatory
compliance: Corporations are
subject to various legal and
regulatory requirements. They must
comply with company laws, taxation
rules, financial reporting standards,
and other regulations applicable to
their jurisdiction of incorporation.
Incorporation offers several
disadvantages, including:
 Increased complexity and
cost: Setting up and maintaining a
corporation involves more
paperwork, legal requirements, and
administrative tasks compared to
running a sole proprietorship or
partnership. This complexity often
requires the assistance of legal and
accounting professionals, resulting in
higher costs.
 Double taxation: One significant
disadvantage of incorporation is the
potential for double taxation.
Corporations are separate legal
entities, and they are subject to
corporate income tax on their profits.
If the corporation distributes
dividends to shareholders, those
dividends may also be subject to
personal income tax. This means that
corporate profits can be taxed at both
the corporate and individual levels,
reducing overall earnings.
 Formalities and
regulations: Corporations must
comply with various formalities and
regulations imposed by the
government. These include filing
annual reports, holding regular
shareholder meetings, maintaining
detailed records, and adhering to
corporate governance requirements.
Failing to comply with these
obligations can lead to penalties or
legal issues
 Loss of personal control: As a
corporation grows, ownership and
control may become diluted.
Shareholders may have differing
opinions and priorities, and decisions
must be made in the best interest of
the corporation and its shareholders
as a whole. This can result in reduced
control for individual shareholders,
including the founder or initial
owners.
 Increased scrutiny and disclosure
requirements: Publicly traded
corporations are subject to extensive
scrutiny and disclosure requirements
imposed by regulatory authorities.
This includes making financial
statements and other company
information available to the public,
which can reduce privacy and
potentially reveal sensitive business
strategies.
CONTENT
The content of incorporation refers to the
information and provisions included in the
document known as the “Articles of
Incorporation” or “Certificate of
Notes 2 by Pamela Jane Torno
Incorporation.” This document is filed with
the appropriate government agency (usually
the Secretary of State) to legally establish a
corporation. While the specific requirements
and terminology may vary depending on the
jurisdiction, the following are common
elements typically found in the content of
incorporation:
 Name of the Corporation: The
chosen name for the corporation,
which must comply with the legal
requirements of the jurisdiction and
should not be identical or confusingly
similar to existing company names.
 Registered Agent and Registered
Office: The registered agent is the
person or entity designated to receive
legal and official documents on
behalf of the corporation. The
registered office is the physical
address where the registered agent
can be located.
 Purpose of the Corporation: A
statement outlining the general
purpose or activities the corporation
intends to engage in. This can be
broad or specific, depending on the
nature of the business.
 Duration: The intended duration of
the corporation, which is usually
perpetual unless otherwise specified.
 Share Structure: Details regarding
the authorized share capital,
including the number of shares and
their par value, if applicable.
 Directors and Officers: The names
and addresses of the initial directors
and officers who will manage the
affairs of the corporation. Some
jurisdictions may also require
additional information such as the
number of directors or their
qualifications.
 Shareholders: The names and
addresses of the initial shareholders
or incorporators who are establishing
the corporation. This information may
be supplemented by a shareholder
agreement or bylaws.
 Bylaws: While not always included in
the content of incorporation, the
document may refer to the
corporation’s bylaws, which outline
the internal rules and procedures for
operating the company.
 Capitalization: Information
regarding the initial capitalization of
the corporation, including any
restrictions or limitations on stock
transfers.
 Incorporator’s Statement: A
declaration by the incorporator(s)
attesting that the information
provided is accurate and that they are
forming the corporation.
CONCLUSION
The incorporation process refers to the legal
procedure through which a company is
formed and recognized as a separate legal
entity. It involves registering the company
with the relevant government authorities and
complying with the necessary regulations
and requirements. The conclusion of the
incorporation process signifies the
completion of these steps and the
establishment of the company as a legal
entity. The incorporation process involves
various steps and requirements to legally
establish a company. It encompasses tasks
such as choosing a business name, filing
documents, appointing directors,
determining share structure, paying fees,
obtaining licenses, and complying with
regulations. The conclusion of this process
signifies the successful formation of the
company as a separate legal entity.
Incorporation refers to the final steps taken
Notes 2 by Pamela Jane Torno

to establish a legal entity known as a

corporation. Once the incorporation process
is complete, the corporation is recognized as
a separate legal entity from its owners or
shareholders. It is important to note that the
specific details and requirements for
incorporation can vary depending on the
jurisdiction and the type of corporation (e.g.,
C corporation, S corporation, non-profit
corporation). Therefore, it is advisable to
consult with legal and financial professionals
who can provide guidance tailored to the
specific circumstances and location of the
incorporation.
Notes 2 by Pamela Jane Torno
Notes 2 by Pamela Jane Torno
Notes 2 by Pamela Jane Torno