Certificate of Incorporation

What is a certificate of incorporation?

The term "certificate of incorporation" refers to a legal document filed with a state to establish a new business corporation. Some states refer to certificates of incorporation as "articles of incorporation." These public records outline the fundamental aspects of a corporation, including the following basic information:

• Corporate name
• Principal office address
• Registered agent information
• Directors or officers
• Stock information

When to use a certificate of incorporation

Certificates of incorporation are essential legal documents used to establish a corporation at the state level. You should use a certificate of incorporation to do the following:

• Form a new corporation: This document officially creates your company as a distinct legal entity
• Register with the state: A certificate of incorporation is required to register your corporation with the state government
• Define company structure: The certificate outlines the basic structure and purpose of your corporation
• Protect personal assets: By establishing a corporation, you can shield personal assets from business liabilities
• Seek tax advantages: Corporations offer potential tax benefits, which begin with proper formation
• Comply with state laws: Each state has specific requirements for corporation formation, which the certificate of incorporation helps to fulfill
• Prepare for future growth: A well-crafted certificate of incorporation can provide flexibility for business expansion

Certificate of incorporation guide

A certificate of incorporation is a formal document used to establish a corporation and define the fundamental aspects of a corporation's structure. Sometimes also referred to as articles of incorporation, a certificate of incorporation must be filed with a state in order to create and register a corporation as a valid business organization within that state.

Certificates of incorporation include the essential details of a corporation, including the following:

• The Corporation's Name: Each state requires that companies have a distinct name, often including the entity designator "Inc." or "Corporation."
• Business Purpose: Some states require that a business purpose be outlined in its certificate of incorporation. This is commonly a general statement, such as "accounting services" or "any lawful act or activity."
• Business Address: The physical address of the business is often required to be reported in lieu of a P.O. Box.
• Registered Agent: This is the person or entity designated to receive legal paperwork, such as service of process or other government correspondence, on behalf of the corporation. The agent's name and physical street address are required to be reported. 
• Directors or Officers: The initial board of directors and managing officers of the corporation are often required to be listed on the certificate of incorporation. These titles can be held concurrently by the same person depending on the size of the corporation.
• The Effective Date of the Corporation's Formation: The date that the corporation's formation takes effect defaults to the day that the certificate of incorporation is filed with the state; however, a specific date may be set forth as the owner wishes.

These requirements are general, common information, and some states may require additional information.

Certificate of incorporation or certificate of organization?

The terms "certificate of organization" and "certificate of incorporation" are often mistakenly used interchangeably. Both documents are used for the purpose of registering a business entity with a state, but certificates of organization are used to create LLCs while certificates of incorporation are used to form corporations. Both business entities provide similar liability protections to the business's owner, but are owned and operated through different structures.

Do I need an attorney to create a certificate of incorporation?

Any business owner may file their own certificate of incorporation and an attorney is not required for their creation. However, it is highly recommended to consult with an attorney or other legal service providers when creating this legal document since each state has its own specific requirements for filing that may be difficult or confusing to navigate. 

What if I need to make changes to my certificate of incorporation?

Articles of amendment should be filed when changes to a company's certificate of incorporation need to be made. Certificates of incorporation may require changing if they contain errors when they are first filed, or there are changes in the business over time. These changes, or amendments, may include reporting a new registered agent, updating the company's business address, or changing the company's board of directors and officers. 

What is the difference between a for-profit and a not-for-profit corporation?

For-profit corporations are owned by shareholders who receive stock in exchange for investments which pay out to the shareholders in dividends. Not-for-profit, or nonprofit, corporations cannot issue shares or stock and have members, but no shareholders. The dividends and profits of for-profit corporations are taxed, while nonprofit corporations are often tax-exempt, falling under Section 501(c)(3) of the Internal Revenue Code.

What should I do after filing a certificate of incorporation?

After filing a certificate of incorporation and paying the filing fee, there is typically a short waiting period for the certificate of incorporation to be reviewed and approved by the state, though many states offer expedited processing for faster service. Once the certificate is approved and the corporation is a registered business entity, there are several actions that should be taken in order to ensure that the newly formed company remains compliant with the department of state:

1. Retrieve an EIN from the IRS: An employer identification number, or EIN, is an essential nine-digit number required for federal tax purposes. Having a valid EIN is often required to apply for other business necessities, such as a license or financial accounts.
2. Choose your corporate tax structure: For-profit corporations are taxed under two different structures: C corp or S corp. C corps pay taxes on their profits and shareholders pay taxes on their dividends, while S corps offer pass-through taxation where profits and losses are reported on shareholders' personal tax returns. Choosing a tax structure is as easy as filing the correct form with the IRS. This choice is integrated into our intuitive online form.
3. Create corporate bylaws: While the certificate of incorporation outlines the general purpose of the corporation, a corporation's bylaws describe the specific functions, regulations, responsibilities, and rules for the business, including protocols for dealing with personal or financial liabilities or internal conflicts of interest.
4. Open a business bank account: Establishing a separate business bank account for your business is crucial for maintaining and managing your business assets and business finances, while protecting yourself from personal liability.
5. Apply for any required business licenses: Some business types are monitored and regulated more heavily by the states and require certification and licensure to operate legally.
6. File annual reports: Most states require corporations to file an annual report with the state's division of corporations to remain in good standing and preserve the liability protections offered by the corporate business structure.