Making Sure You Have the Right Documentation
Incorporation is the process of forming a company or corporate entity legally that separates the assets and income of the firm from the investors and owners. To do this, there are formal documents required called articles of incorporation. These documents, incorporation articles, are filed with the government, so the creation of the corporation becomes legal.
Those documents, the incorporation articles,contain relevant information, that includes the firm’s name, street address, and the agent for service of process. Also included in this paper is stock information that breaks down how the stock is to be issued and in what amount.
What is another name for articles of incorporation?
Many businesses in the United States are formed as a corporation, a business type that is formed in whatever state the company operates. To have legal recognition as a corporation, the business must incorporate which requires certain steps and decisions that corporate law requires, such as filing the Articles of Incorporation.
Other names for Articles of Incorporation are:
- Corporate Charter
- Articles of Association
- Certificate of Incorporation
Why is the Articles of Incorporation so important?
The importance of Articles of Incorporation are to establish a company within the home state and inform that state of the key business aspects. Filing of the Articles of Incorporation is how the owner advises the home state the purpose, the name, address and of the corporation along with the name and address of the agent. The incorporation articles also advises the state the number of authorized shares and amounts of common stock, along with incorporators names. A copy of company bylaws is requested by some states.
Why get incorporation articles?
Incorporation articles separate the business owner and the business from each other. The Articles of Incorporation create a legal entity for the business and reduce the personal risk for a business owner, making the business financially responsible for debts under the business name and responsible legally for any possible lawsuits.
The following are the incorporation articles benefits a business owner will have:
- Secure your personal assets. With incorporation articles filed, an owner an enjoy the protection of a limited liability and won’t be personally responsible for the business debts. This means a creditor cannot pursue your home or vehicle to repay debts incurred under the business.
- Gain tax breaks Incorporation articles give you tax advantages like writing off health insurance premiums, life insurance, and savings on self-employment taxes.
- Grow your corporation now and later. Incorporating strengthens credibility and can help you reach other avenues for new customers and partners. With incorporation articles, even if you die or sell your interest, the corporation will live on. .
- Easier and faster transfer funds. It is easy to transfer a corporation ownership. Raising capital is easier by way of selling stock, and banks favor corporations for loans.
- Retirement ready. Retirement funds, 401k, and qualified plans are easier to establish.
What are the articles of incorporation for an LLC?
Articles of Organization are similar to Articles of Incorporation, the difference being the Articles of Organization are for LLCs (limited liability companies), which is a totally different business classification with the IRS.
The business owner has financial and legal protection by doing busines as an LLC. This is the preferred business classifications for companies that will have assets where value changes, like real estate holdings. LLCs also provide liability and tax benefits according to IRS stipulations.
Where an LLC differs from a corporation, holdings aren’t transferred as easy and outside investors are fewer. The state regulations and rules should be repaired before you file your document, you may find that your state will use both types of classifications Incorporation Articles and Articles of organization, interchangeably.
Does a single member LLC need articles of incorporation?
Theoretically, no, but it is recommended since the objective of the operating agreement is to state an LLC’s operations while set out the members responsibilities, even with a single member.
Is operating agreement and articles of incorporation the same thing?
Yes, but no. Conceivably the key difference between an operating agreement and an article of incorporation is the operating agreement defines how the business owners are professionally relate in a binding way. The article of incorporation defines how the business is legally related to the state.
The important similarities between the two is the significance each has, and both provide the information necessary for a business to operate at optimum ability. Both documents detail the business name and function, describing how the business is to operate. Both documents define the business management and ownership structures.
How to get articles of incorporation
Articles of Incorporation does not need to be prepared by a lawyer, however, it is recommended to seek legal advice because of the complex legal issues involved for starting a business. , Under Pennsylvania law, several specialized corporations may be incorporated, a topic a lawyer can advise.
Business corporation ancillaries may be established at the time of filing of the articles of incorporation. Or the owners may choose specialized status with a vote by the shareholders for an amendment of existing articles. In Pennsylvania state, the Articles of Incorporation – For Profit should be file convoyed by a docketing statement and filed with the Bureau of Corporations and Charitable Organizations.
Last Few Words
Is it necessary to that filing articles of incorporation and lawyers are involved? No, it is not necessary to have a lawyer involved when filing articles of incorporation. For a person that is start a business and doesn’t have a business background, education, or training, a business lawyer could be of great help in making important decisions, some of which cannot be changed easily.