Corporations are fully capable of acting on their own and conducting business. An incorporated company is responsible for its own debts, and can own property and enter into contracts. The incorporated company can sell stock to raise capital. It can continue to exist long after the original owners have passed on, and ownership can be easily transferred. If something happens, the company itself is responsible, and none of the individuals in the company lose personal property in the process
What Do You Need To Become a Corporation?
The primary set of documents you need in order to incorporate your business are called Articles of Incorporation. These articles tell the state what you want your name to be, where you will be located, and under what conditions you will be operating your business. Once approved, the state will file your articles and you will be considered “in existence” from that date on. Most states will either issue you a receipt or an official “Certificate of Incorporation.”
You can use an attorney to assist you in drawing up incorporation articles, or you can use incorporation services. Incorporation services handle these and other necessary documents so that you don’t have to. They also perform additional important tasks, such as making sure your chosen company name is available.
What Information Do You Find in Articles of Incorporation?
The first thing you will declare is your company name. It is critical that you have a name no other company has, or your articles will be rejected. Most states require that the name include a designation such as Incorporated, Inc., Corporation, or Corp.
The articles then continue to define your business for the purpose of becoming a legal corporation. They describe the nature of your business, authorized number of shares and class of stock. They declare the company’s official address and chosen registered agent, which is you, an attorney, or separate organization who will receive all legal and other official communications on the company’s behalf. The articles list the term of existence for the corporation, either for a set period of time or continuously. They define the corporation’s limitation of liability and any other special provisions. They may even list the number of directors.
The Articles of Incorporation are signed by the incorporator and registered agent and notarized.
What Happens Next?
Once the appropriate state official receives your information and necessary fees, they are reviewed for name availability and appropriate content. Then, the state official files the articles and your company is a corporation from that day forward. As stated above, you will receive a receipt, charter, or certificate confirming the incorporation is complete.
What If I Want To Become A Non-Profit Corporation?
Obtaining 501(c)(3) status (which defines your company as non-profit) will bring your corporation a wide range of benefits. The first is a federal tax exemption, making both contributions to your company and profits made by your company tax-free. Your corporation will have access to grants and funding for which it would not otherwise qualify. You will be permitted to participate in governmental programs only available to non-profit organizations, including job training for your employees. You will have the benefit of lower rates for many products and services. This is just a small handful of the benefits.
In order to become a non-profit corporation, you must first become a corporation by following the same procedures, including filing Articles of Incorporation with the state.
By Alisa Elizabeth King Terry