The articles of incorporation set forth basic information about your new for-profit corporation as required by your state. The following guidelines will be helpful to you as you complete this important document to bring your business into existence.
This section specifies your exact proposed corporate name. Include exact spelling, punctuation, and an appropriate entity identifier such as "Co." or "Inc."
In most states, you may search online to determine if your desired corporation name is available. It is helpful to conduct a search for your new for-profit corporation's proposed business name. This ensures that your corporation's name is unique and will not be confused with other similarly-named businesses.
For the corporate address, enter the address of the corporation's office. This is generally within the state of incorporation. Do not use a post-office box (P.O. Box) address.
If the corporation's initial and physical address is not where the corporation wants to receive mail, then add a different mailing address. This may be a P.O. Box address.
(Note, this section only applies to corporations being formed in one of the following states: Arizona, California, Delaware, Georgia, Illinois, Kansas, Maryland, Missouri, Montana, Nevada, Rhode Island, South Carolina, Texas, Vermont, Wisconsin, and Wyoming.)
These states permit two types of for-profit corporations. One is the "standard" or general corporation with all the familiar formalities such as required annual meetings and management by the board of directors. Following these formalities allows shareholders' liabilities toward the corporation to be limited to only their direct investment in the company.
The other type of for-profit corporation is a statutorily close corporation. State law allows the close corporation to operate with less corporate formalities, such as being managed by shareholders instead of directors and eliminating regular meetings.
Close corporations do have certain limitations, including restrictions on the number of shareholders, restrictions on transfer of stock, and a lack of formalities that may make traditional funding sources (such as banks) slightly weary of lending to the close corporation.
Select the corporation type that is suitable for your business. Consult an attorney in your state for more details on the corporation type distinction if necessary.
The business purpose describes the activities that the corporation will conduct at the time of the initial filing. The corporation's purpose and activities may change at a later date. However, an initial description must be provided.
The purpose description may be extremely broad and general. The default general purpose description is that a corporation may conduct any lawful activities. You may also choose to add a specific business purpose.
For example, a corporation that creates and hosts websites may have a specific purpose such as, "To register domains and create, design, host, and maintain commercial websites for customers." The document will still retain the general language that the corporation may engage in any lawful activities. This ensures that the company does not unnecessarily limit its activities and options in the future.
One of the best features of a corporation is its ability to exist in perpetuity. Theoretically, a corporation may remain in existence forever. Since most corporations do not have an end date in mind when the corporation is established, most corporations choose their duration to be "perpetual."
If, for any reason, your corporation is established for a fixed duration, then you may indicate your desired end date or the number of years of existence in this section.
A registered agent is also known as a "statutory agent." This may be an individual or a business entity residing within the corporation's registered state. The registered agent is statutorily responsible for ensuring reliable communication between the state and the corporation by receiving and forwarding service of process, such as lawsuits, legal documents, notices, or demands, on to the corporation. It is important to note that a corporation may appoint a director or officer of the corporation as its registered agent, but the corporation itself may not act as its own registered agent.
It is mandatory that every corporation provide the registered agent's full name. If the registered agent is a business entity, you should include the entity designation of the business, such as "Inc." or "Co."
It is also mandatory that every corporation provide the address where the registered agent is required to receive the corporation's legal correspondence. As this address is generally public information maintained by the state and available to the public, for confidentiality purposes, the corporation and registered agent may consider using a business entity's physical address rather than a residential or private address of an individual affiliated with the corporation. LegalNature provides the registered agent with the option to use the corporation's physical address, the corporation's mailing address, or any other address where the registered agent is willing and able to receive mail for the corporation.
To ensure that the registered agent understands his or her responsibilities and to confirm this understanding to the state, the corporation may include a Consent of Registered Agent form for the registered agent to execute. The form is only mandatory in Louisiana, Pennsylvania, Texas, and Wyoming. It states that the registered agent agrees to become a registered agent for the corporation, to receive service of process and forward such correspondence to the corporation, and to update the state should the registered agent resign or be replaced.
As states move forward to update their procedures and systems to accommodate new forms of communication such as electronic mail, it may be useful to include your corporation's email address as an optional communication channel. As states maintain their documents and contact addresses differently—some of which may be or become public information—the corporation may consider using a business email address instead of the personal email address of an individual affiliated with the corporation for privacy purposes.
Corporations are owned by their shareholders and each share is a unit of ownership in the corporation. Shares with the same rights, privileges, limitations, and restrictions are in the same class of shares.
Shares may be assigned a par value or have no par value. Par value is a nominal value of the original cost of a share. For example, corporations commonly assign "$0.01" or "$0.001" as par value for their shares.
For the purposes of satisfying state law, every for-profit corporation must decide the number of share classes, the shares within each class, and the par value, if any, of each share per share class that the corporation will be authorized to issue. The authorized share number is the maximum number of shares that a corporation is legally permitted to issue, although the corporation does not have to actually issue any of the shares it is authorized to issue. The authorized share number cannot be zero and may be increased at a later date by amending the document.
Most for-profit corporations initially establish only one class of shares. This basic one-share class structure is easy to establish and meets most corporations' initial demands. States only require information on the number and par value, if any, of the shares authorized.
If your corporation has more than one share class, then for each share class enter the share class name; the number of shares authorized for issuance within the share class; the par value for a share within the share class; and the rights, preferences, privileges, and restrictions to the share class. A popular multi-share class structure is to establish two classes: a common stock class and a preferred stock class. In addition to the different class names, the preferred stock class may have different rights, preferences, privileges, and restrictions. For example, your preferred stock class may have a guaranteed dividend distribution right when common stock class does not have any dividend distribution right. Be concise and enter as much of these distinguishing rights, preferences, privileges, and restrictions for each share class as needed to differentiate the classes.
When completing the authorized shares for a Connecticut corporation, the corporation should be aware that the minimum franchise tax that a corporation must pay authorizes 20,000 shares or less upon incorporation. If a corporation wishes to issue more than 20,000 shares, it must pay a franchise tax calculated on a sliding scale. This may be found at the Secretary of State's website.
KRS 136.060 requires every corporation to pay an organization tax based on the number of shares authorized in the articles of incorporation. The minimum organization fee for 1,000 shares or less is $10.00. If the corporation authorizes more than 1,000 shares, contact the Secretary of State's Office at 502-564-3490 for an accurate computation of the corporation's Organization Tax Fee.
Maryland assesses a minimum "Organization & Capitalization Fee" of $20.00 on corporations with total par value under $100,000.00 or with more than 5,000 shares of no par value stock. If the corporation authorizes stocks that exceed these amounts, contact Maryland's State Department of Assessments & Taxation at (410) 767-1340 for an accurate computation of the corporation's organization and capitalization fee.
Massachusetts' minimum filing fee is $275.00 based on 275,000 authorized shares plus $100.00 for each additional 100,000 shares or any fraction thereof. If the corporation authorizes share numbers that exceed 275,000, then the organization filing fee increases as well.
Michigan assesses a minimum "Organization Fee" based on the number of authorized shares. The fee structure is as follows and should be kept in mind when deciding the number of shares the corporation should authorize in its articles of incorporation:
Missouri assesses its filing fees based on the dollar amount of authorized capital. The filing fee is $58.00 for up to 30,000 shares or the par value up to $30,000.00. For every 10,000 shares that exceed 30,000 shares or for every $10,000.00 par value authorized shares that exceed $30,000.00, there is an additional $5.00 filing fee. For example, if a corporation authorizes 50,000 shares in its articles of incorporation, then the corporation's filing fee would be $58.00 + $10.00 = $68.00.
Nebraska's filing fee is assessed based on the amount of authorized capital stock and length of the articles of incorporation, measured in pages.
Nevada's filing fee is assessed based on the value of the total number of authorized shares stated in the articles of incorporation.
New Mexico's filing fee is assessed based on the total number of authorized shares stated in the articles of incorporation. The filing fee rate is one dollar for each 1,000 shares, but in no case will the filing fee be less than $100.00 nor more than $1,000.00.
New York assesses a minimum tax of $10.00 on shares that the corporation is authorized to issue. The $10.00 tax authorizes the corporation to issue a maximum of 200 shares no par value or a par value of all authorized shares up to $20,000. Corporations wishing to be authorized to issue more than 200 shares no par value or par value shares totaling more than $20,000 will incur a tax of more than $10.00. The tax rate is 5 cents per share of no par value stock and 1/20 of one percent (.05%) of the par value of the shares that have a stated par value.
Oklahoma assesses a minimum filing fee of fifty dollars for total authorized capital that is $50,000 or less. Total authorized capital is derived by multiplying the number of authorized shares by the par value of each share. If the total authorized capital for the corporation is greater than $50,000, then the fee is $1.00 per $1,000 authorized capital value.
For the purposes of calculating total authorized capital, a no par value stock is valued at $50.00 per share for determining fees only. This effectively means $50.00 is the minimum filing fee for corporations authorizing less than 1,000 shares of no par value stock. For a number of shares greater than 1,000, the fee is $1.00 per 20 no par value shares.
Rhode Island assesses a minimum filing fee of $230.00 for less than 75,000,000 shares of authorized stock and one-fifth cent per share of each authorized share for 75,000,000 shares or greater.
The charter fee and annual registration fee in Virginia are based on the number of authorized shares. For the charter fee that must be paid upon filing the articles of incorporation, the minimum fee is $50.00 for up to 25,000 shares. Consult the Charter Fee/Entrance Fee Schedule for more exact fees.
Here you enter the initial number of directors. This number may be changed in the corporate bylaws. This is an optional requirement in most states except for Maryland.
Provide the name and address of each initial director. As with the registered agent's address, which may be or become public information, the directors may consider using a business address rather than a residential or private address for privacy purposes. Do not provide social security numbers, dates of birth, or other private identification information.
One of the main reasons business owners choose to form a for-profit corporation is to receive liability protection. Directors and officers of a corporation typically are not personally liable for monetary damage, even if their corporate decisions, acts, or omissions turn out to be bad business decisions in hindsight. The rationale is generally to encourage corporate directors and officers to take action and make business judgments to the best of their ability and without fear of personal liability at a later date. If the corporation elects to allow such liability protection for its directors and officers, select "Yes, without restrictions" to provide the maximum personal liability protection allowable by law.
Corporations may elect to change the typical liability protection for its directors and officers in the document. To write in your own liability protection restrictions for the directors and officers, select "Yes, with restrictions" and enter your restrictions in complete sentences. For example, you may specify that "Officers are liable for damages resulting from failure to disclose any potential conflict of interest."
To eliminate all personal liability protection for corporate directors and officers, select "No" to the question of "Limited Director and Officer Liability."
Add any additional terms that have not already been addressed in your document. Use complete sentences, and remember that your document does not need to be long or complicated—it just needs to satisfy state requirements.
An incorporator is a person, or business entity if permitted in your state, that prepares, files, and verifies the truth and accuracy of the document, and signs it. In essence, the incorporator sets up the corporation by creating its formation documents with the state.
List each and every incorporator with their full name and address. As the incorporator's address may be or become public information, the incorporators may consider using a business address rather than a residential or private address to protect their privacy. Every listed incorporator must sign.
A notary acknowledgment is used to verify the identity of someone signing a document. The notary acknowledgment is optional for most states. The acknowledgment is absolutely required when incorporating in Louisiana. If incorporating in Louisiana, print a copy of the page entitled "Notary Acknowledgment" for each incorporator signing the document.