Articles of Incorporation: Letter of Incorporation Registration, Use, and Submission
Articles of Incorporation is the legal paper that is filed with the state government to charter an organization. The Article of Incorporation provides evidence of the existence of a company in a country.
The articles of Incorporation document is used when someone wants to incorporate a business. These documents have the corporation details, shares number that can be issued by the corporation. Registered agent address and the address of office registered initially, and incorporator address and names.
Additionally, they can also contain the details of initials directors, corporation purpose and its primary activities, and initial provisions that are leading corporation management. However, specific regulations and laws vary among states to incorporate a business.
Articles of Incorporation Similar Documents
The articles of Incorporation also recognized by the following names
- Corporate Charter
- Incorporation Certificate
- Organization Articles
- Company Constitution
- Incorporation Papers for Business
Various kinds of corporations
In the United States, there’re following kinds of corporations
- C Corporation
It’s a traditional incorporated business model and its structure is used by so many companies. It is a legal and distinct entity from shareholders. This is for the separation of assets ownership, taxation, and legal liability. Through this, the owner of the business gets maximum benefits of protection for its assets, and the company also comes in a position to entice the investment by issuing shares.
However, when the company has to pay the taxes than it pays them through the profit it gets. On the other hand, the shareholders pay their taxes through bonuses, salaries or any dividends that are given to them.
- Limited Liability Corporation
This type of corporation is somewhat new and is designed for smaller businesses. It combines the LLCs benefits with partners’ administrative efficiencies and the tax. In LLC there’s less regulation and paperwork. Additionally, the personal assets of the owner and debts are protected from LLCs.
Moreover, for the purpose of federal tax, LLC isn’t viewed as sperate businesses. Because of this, owners have to pay taxes on self-employment directly on profits they get. But keep in mind that, there’re some states that apply different corporate taxes on LLCs.
- S Corporation
This kind of corporation is usually characterized by the eligible LLC or a C corporation making Tax election of IRS as a corporation or small business. In this kind of corporation losses and profits pass to the company’s shareholders and they get taxed directly. On the other hand, S corporation isn’t itself taxed to avoid double taxation. So, any person who works in a S corporation has to give himself the salary so that he can pay the taxes through his income.
Anyhow, the treatments of tax may vary among states. C corporation or the LLC are eligible of becoming the S corporation when they have 100 shareholders. However, the shareholders must be individuals and not partnerships or corporations.
It’s also recognized as a statutory agent or resident agent. This is the person who has a street address that is legal, and the address should be of that state where the company is going to be incorporated. The registered agent has to be available regularly during business hours. Additionally, he will be responsible for getting all the documents related to taxes and legal actions that will be taken against the business.
When to use Incorporation Articles?
Incorporation articles can be used depending upon the industry you are in and the laws of the state. For example, in Florida, you cannot use the incorporation articles for business purpose in the industries as follows
- Credit unions & Banking
- Loans & Savings
- Waterworks & Railroads
- Public services & Utilities
Why use Incorporation Articles?
These are needed to incorporate the business. The business can be incorporated to get the following benefits
- To shield the personal properties from legal action and business creditors.
- Options for managing the tax from deductions and income.
- Can issue the shares that can be used to gain capital after selling them.
- It can help to separate the status of legal entity which will help in attracting more lenders to business.
- You will have more confidence and credibility in the business.
Related Forms to Articles of Incorporation
- Business License
It’s the official permit issued by the government with which you can conduct the business.
- Corporate Bylaws
It’s an official document that helps the corporation to govern the internal management.
- LLC Operating Contract
This document helps in the description of the duties and rights of members in LLC.