Certificate Of Incorporation Vs Articles Of Incorporation

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Incorporator’s Names And Addresses

Certificate of Incorporation vs Articles of Incorporation

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.

The Articles Of Incorporation Create The Legal Entity Of The Corporation

In the eyes of the law corporations are also legal entities like you and I – they can enter into contracts and be sued. Corporations are entirely separate legal entities from the people who create, own, and run them. When the state approves your articles of incorporation, they create the legal entity of the corporation, which is often evidenced by a formal certificate of incorporation mailed back to the incorporator. The corporation continues to exist until it is dissolved.

Can You Amend Your Articles Of Incorporation

Every state allows amendments to business filings, but the process may vary slightly. In some states, you may be able to submit an amendment online, while others may require a mailed or faxed amendment form. Check with your Secretary of State or Department of State to confirm the process.

Keep in mind that many states set deadlines for filing amendments. For example, you may need to amend your articles of incorporation within a certain number of days after making changes to your business name, your company’s purpose, or other key details.

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What Are Some Common Mistakes With Articles Of Incorporation

Business owners sometimes make mistakes when creating and filing articles of incorporation, including the following:

  • Not reviewing and adhering to state guidelines. You should double-check that any guides youre following about how to file articles of incorporation pertain to your state. Rules for filing can differ substantially by state. You should also confirm that any attorneys you work with are well versed in your states guidelines.
  • Choosing an invalid registered agent. Not just any person or company can be the registered agent for your articles of incorporation. This person or company must live in the state where you file your articles. They also must be easily reachable, so choose a registered agent who works regular business hours within your state.
  • Confusing them with articles of organization. A corporation must file articles of incorporation, whereas an LLC must file articles of organization. Check your filing bodys website for the proper forms, and ensure youre actually filing the forms that are relevant to your business type.
  • Filing with the wrong government body. Some states require that you file articles of incorporation with the secretary of states office. Others require you to file with the state commerce department or another government body. Double-check that youre filing with the correct office to avoid any problems or delays.

What Should An Operating Agreement Include

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The information you include in your operating agreement or bylaws depends on your businesss and states specific requirements. However, an operating agreement generally includes ownership, operations, management and financing details.

Robert Gauvreau, CEO of accounting tax law advisory firm Gauvreau, created an outline for the information an operating agreement should cover, including the following elements:

  • A description of the business operations.
  • The separation between the LLC member and the business entity .
  • The succession plan .
  • How managers get appointed, and their responsibilities and obligations to the business.
  • How members/owners get to vote on important issues.
  • The restrictions of transfer of ownership and how it occurs.
  • How funds are raised and repaid from the business.
  • How profits, losses and distributions are to be treated.
  • How the books and records should be maintained.

An operating agreement can also include other items you feel are necessary to business operations and the protection of the businesss and owners rights.

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Learn Whether Your Business Needs An Operating Agreement Bylaws Articles Of Incorporation Or A Certificate Of Formation

  • An operating agreement outlines the relationship between business owners, and articles of incorporation outline a businesss relationship with the state.
  • All limited liability companies can benefit from having an operating agreement and a certificate of formation.
  • All corporations can benefit from having bylaws and articles of incorporation.
  • This article is for business owners who want to understand the similarities and differences between operating agreements and articles of incorporation.

Filing the proper paperwork is an essential element of starting a business. Although choosing the best legal structure for your business and filling out forms can seem tedious and daunting, these steps are often legally required parts of the process.

Many small business owners get confused about operating agreements and articles of incorporation. Theres a good chance youll need some version of both for your business, so its important to understand each documents purpose.

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 corporations 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 companys debts.
  • Ability to sell stock: After incorporation, you can raise capital quickly through the sale of stock. You can outline how youll sell stock to raise capital in your companys business plan.

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Choose Incorporators And Directors

Your directors will help you develop and maintain a healthy nonprofit. You will also need an incorporator. An incorporator is the person who signs your articles of incorporation and must be at least 18 years of age. A director serves on your nonprofits board to guide its development, mission and ethical business practices. You are required to have at least three unrelated directors. The president and secretary must be two different people.

Choose directors who can offer unique guidance based on their past experience and credentials. For example, you might recruit someone who can help expertly guide the organizations finances and another to guide fundraising efforts. Directors should also be available to attend board meetings, enforce the nonprofits mission and policies, and otherwise carry out the boards fiduciary duties.

Does Every Business Need An Operating Agreement

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Depending on your business type and state, you may be legally required to file an operating agreement. For example, any LLC conducting business in California, Delaware, Maine, Missouri or New York must file an LLC operating agreement. Although LLCs in the other 45 states arent legally required to have an operating agreement, it is highly recommended.

Similarly, corporations are not legally required by any state to have an operating agreement. Still, experts advise owners of these businesses to create and execute their version of an operating agreement, called bylaws.

Bylaws establish the rights and duties of the parties involved in the corporation and, if properly followed by the parties, limit the possibility that courts will pierce the corporate veil and hold shareholders personally liable for corporate debts, said Kelly DuFord Williams, founder and managing partner of Slate Law Group. Additionally, some banks and lenders will ask for corporate bylaws to ensure the legitimacy of the corporation before extending loans or opening accounts.

Did you know?: Bylaws often include succession-planning agreements and decisions. This prevents business closure when a founder dies or an owner exits the company.

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What Is A Certificate Of Incorporation Vs Aoi

Knowing what a certificate of incorporation vs articles of incorporation is can be important when forming a business.3 min read

Knowing what a certificate of incorporation vs articles of incorporation is can be important when forming a business. These are both essential documents that serve different purposes. One of the first steps when forming a corporation is to file the articles of incorporation in the state where you plan to operate. This is often with the office of the Attorney General or Secretary of State. Some states call this the certificate of incorporation.

How Do You Get A Copy Of Your Certificate Of Incorporation

After filing your certificate of incorporation, it’s important to keep a copy on file. You may need to provide copies to investors, members of your board of directors, or other parties.

In every state, certificates of incorporation are considered public information. That means anyone can request and receive a copy of your articles of incorporation. To request a copy of your charter, follow these steps:

  • Visit the website of the department that oversees business filings in your state. This department may be the Secretary of State, the Department of State, or the Division of Corporations.
  • Navigate to the business entity or corporate filings part of the website and search for the name of your corporation. Click on the right search result, and review the options.
  • Follow the instructions for requesting a copy of the certificate. For example, in many states, you can complete a form online. Other states require you to submit a request by mail.
  • Pay the required fee. Most states charge a nominal fee for copies of the certificate of incorporation, as these documents may be dozens of pages long.
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    When Can I Use Articles Of Incorporation

    Articles of incorporation separate the business owner from the business by creating a separate legal entity for the business. Incorporating reduces a business owners personal risk because the business becomes financially responsible for its debts and legally responsible in the case of lawsuits.

    Any business type can file articles of incorporation. A new business may launch as a corporation, or a business structured as a sole proprietorship can later become a corporation. Smaller businesses typically become S corporations and pay taxes only on dividends, while large businesses often become C corporations, which pay corporate taxes and must have a board of directors to operate.

    How To File Your Articles Of Incorporation

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    Once the form is completed, the next step is to make sure that the filing fee is also included with your paperwork. Filing fees can range from state to state, with Arkansas coming in at the lower end with a fee of $45 and Nevada proving to be the most expensive with a fee of $725.

    From there, you can begin taking the following steps:

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    Which Is The Best State For Incorporation

    This is a tricky question! Usually, people choose to incorporate their businesses in their home state, but this isnt always the case. Some entrepreneurs decide to incorporate in a different state if they determine it will offer financial and legal advantages.

    The state in which a business is incorporated can affect how much it pays for formation filings and ongoing compliance. It will have an impact on its tax burden . And it will affect its legal responsibilities and vulnerability. These are serious considerations, and I recommend talking with an attorney and an accountant to get expert guidance to help you make an informed decision.

    Additional Names And Addresses

    • Some states may require you to provide the address of the main office of your company in the articles. This address need not be the same as your principal place of business.
    • The Articles of Incorporation must state the name and address of your registered agent for receiving legal communication on behalf of the company.
    • The articles must also contain the name and signature of the incorporator . In some states , you may also have to mention the address of the incorporator.
    • The names and addresses of the initial directors of the company may also be required in some states.

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    Hire Or Appoint A Registered Agent

    A registered agent is someone who is consistently available in your nonprofits office during business hours and throughout the year to receive key paperwork for your nonprofit. Most nonprofits need to appoint a registered agent, however, it is not required to appoint a registered agent for your nonprofit in Texas if it is unincorporated, but it is recommended.

    While some organizations opt to appoint the president or other internal manager as the registered agent, this can pose some problems. Namely, you must be in the business during all business hours. This means no stepping out and no time off. The registered agent must also be willing to receive potentially embarrassing documents, such as notifications you are being sued, in front of donors who may be in your business at the time of delivery.

    To avoid these concerns, you can affordably hire a registered agent to handle your paperwork for you and offer timely notification of important paperwork your business receives. Check out our 7 Best Texas Registered Agent Services buyers guide to find the best fit for your needs. In it, we provide the pros and cons of each top registered agent in Texas, their prices and the standout services they offer.

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    Starting Your Business The Right Way

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    Launching a business involves more than opening your doors to potential clients or customers. It also means setting up formal internal protocols and registering with the government. These parts of forming a business can be tedious, but if you get them right the first time, youre off to a great start.

    Max Freedman contributed to the reporting and writing in this article. Some source interviews were conducted for a previous version of this article.

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    Articles Of Incorporation Vs Certificate Of Organization

    Clients often come to us because they have been asked to provide a document called the “Certificate of Organization”. This document is commonly requested by financial institutions during financing or merger related activities. It can also be requested by insurance companies, attorneys, accountants, and more.

    This document frequently causes confusion because it has a variety of names, based on the state the entity was formed in. You may be asked for your Certificate of Formation, Articles of Organization, Certificate of Organization, Articles of Formation, or your company formation documents.

    In Delaware, this document is called the Articles of Incorporation or Articles of Formation .

    When the term “formation” is used, it’s referring to an LLC. When the term “incorporation” is used, it’s referring to a corporation, regardless of whether “articles” or “certificate” is in front of it.

    All of the terms mentioned above are referencing the same document – the document that proves the creation of your company or corporation.

    You may be asked for your Certificate of Organization and you’ll present them with your Articles of Formation.

    When you form a corporation or LLC with The Incorporators, we send you this document with your package.

    If you choose one of our E-Kits, you will have received this document via email.

    If you chose one of our Basic, EZ Snap Kit, or Executive packages, you will have received this from us via UPS along with your corporate supplies .

    The Purpose Of Incorporation

    • The purpose section should describe what type of business you intend to engage in.
    • Most of the states allow describing the purpose in the form of a general statement, such as engaging in any lawful business activity under the state laws.
    • A general statement of purpose gives you more freedom to decide upon the type of business for your company if you happen to diversify or change the line of business down the road.

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    What Is The Difference Between The Articles Of Amendment And Restated Articles Of Incorporation

    The Articles of Amendment contains the provisions submitted to amend the original Articles of Incorporation on file at the Department. Corporations that, in separate filings, have amended sections of the original Articles of Incorporation, can use the Restated Articles of Incorporation to restate the entire articles of incorporation so that there is only one document to reference in the future. It should be noted that the Restated Articles of Incorporation cannot contain any new amendments. It merely combines the original document and any amendments already on file into one document.

    To submit amendments AND restated articles of incorporation, use the Amended and Restated Articles of Incorporation .

    Forms DC-3, DC-4, DC-5 and more are available for download on our Domestic Profit Corporation Forms page. Please scroll to find your form.

    What Is Included In Articles Of Incorporation

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    AOI vary from one state to another but generally include the following information:

    • The name and principal office address of the corporation.
    • The purpose of the corporation.
    • Information about the registered agent of the corporation, such as name and address.
    • Type of corporate structure .
    • Names and addresses of each member of the corporations initial board of directors.
    • Number and type of authorized shares your company intends to issue, which may include common and preferred shares.
    • Business duration.
    • The name and address of each incorporator .
    • Signatures of the incorporators.

    Make sure to check the rules in your state when you file articles of incorporation. The state your business operates in may require more sections or details within the section.

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