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What are Articles of Incorporation?

Brendan McGuigan
Brendan McGuigan

Articles of incorporation comprise the key document submitted to the state or governing body to create a corporation in the eyes of the law. They are usually the final piece of a lengthy process to create a new corporation, and they cement the principles and key details of the business.

This document may be a few short pages, or may be hundreds of pages long, lapsing into legalese and detailing every small facet of a complex corporation. Details include what the corporation is meant to accomplish, (commonly sphere of business or nature of non-profit), its headquarters, officers that may be named, and primary rules set up to dictate the organization and workings of the corporation.

Businessman giving a thumbs-up
Businessman giving a thumbs-up

Creating articles of incorporation is a rather difficult process, and for all but the simplest of corporate structures, an attorney is a necessity. Some books, such as the Nolo series, attempt to explain the steps towards writing the articles in such a way that anyone can do it, but even with such aids, a lawyer is a strong asset in reviewing your work.

Once the document has been filed and accepted by the state, the company transforms into a corporation, and may be said to be incorporated. This is commonly denoted by the abbreviation Inc. after the company title.

Articles of incorporation are comprised of, as the name suggests, a number of articles delineating the structure and methodologies of the company. These are laid out following a relatively standard format, which looks something like the following:

ARTICLE I: Nature of Business — A description of the business.

ARTICLE II: Name — The name of the business.

ARTICLE III: Term — The length the business will remain incorporated, (usually indefinitely, but in some cases there may be a self-imposed limit).

And so on, for as many articles are needed. Stock dealings, salary and bonus caps, a limitation of liability, and other broad information may be included in the articles of incorporation. For smaller details, the corporate bylaws are usually used, though some corporations may choose to outline that information in the incorporation articles.

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