Every state gives individuals or groups the right to start a corporation. The Articles of Incorporation are documents that establish a corporation in the state where the individual or group lives and include basic information about the corporation's purpose. Once a corporation is created, it exists separate from its owners and is liable for its own debts and taxes.
Articles of Incorporation basics
Though there are many different factors that will affect the operation of a corporation, the initial steps to establishing any corporation are much the same.
- Decide the type of corporation you want to establish (standard, LLC, non-profit, etc.).
- Choose an available name for the corporation. One good place to start your search for an available name is the Patent and Trademark office.
- Complete your Articles of Incorporation. You can write your own, consult a legal expert, or use available forms that can help streamline the process.
- File your Articles of Incorporation with the state and pay all applicable fees.
Considerations when filing Articles of Incorporation
Since there are many different kinds of corporations, there are many different things to consider when starting one.
Besides the standard corporation, you may want to create a Limited Liability Corporation (LLC). An LLC works like a combination corporation-partnership. Generally, an LLC is easier to establish than a standard corporation and requires less effort to maintain. The laws regarding LLCs are still evolving, however, and you should consult with a legal expert before establishing this type of corporation.
Another type of corporation is a Non-Profit Organization (NPO). Establishing an NPO is a similar process to other corporations, except that the purpose of an NPO cannot exist for anyone's private benefit. However, there is no law preventing NPOs from making money for the benefit of the corporation. Though an organization may be non-profit, contributions to it may not necessarily be tax deductible, unless it is registered with the IRS as a tax-exempt 501(c)(3) group.
If you want to establish a corporation, you will also need to consider the following:
- Insurance needs
- A company name (one that is available and defensible)
- Local, state, and federal regulations
- Stocks and stock options (when applicable)
- Ever-changing tax laws
Filing Articles of Incorporation
Articles of Incorporation don't need to be very long or complicated. Most states require only that they include the following:
- Name and address of the new corporation
- The general purpose of the corporation
- Name and address of the corporation's main contact person
- Stock information
Articles of Incorporation can be created by anyone, with or without the help of an attorney. Often, the office of the Secretary of State has Articles of Incorporation forms that can be easily filled out and submitted.
Once the Articles of Incorporation are completed and signed, they must be filed with the state. There is usually a fee for filing. The fee varies depending on the type of corporation being established, but it can be as little as $30 or as much as $300.
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