articles of incorporation on a desk with glasses and calculator

What Are Articles of Incorporation?

Have you ever wondered how companies get the terms “Inc.” or “Limited” in their names? They go through a legal process to form their business. Here’s a basic overview of what you need to know about articles of incorporation so you can get your firm started. 

What is incorporation? 

Incorporation is the legal process used to form a corporate entity or company. This is accomplished through articles of incorporation, which are a set of formal documents filed with a government body to legally document the creation of a corporation. Most states require the articles of incorporation to state the firm’s purpose, though the enterprise may define its purpose very broadly to maintain flexibility in its operations. 

After you’ve completed the paperwork, the articles of incorporation are filed with the Secretary of State. Some states offer more favorable regulatory tax environment, which can attract a greater amount of business. 

Where can I get a copy of the articles of incorporation? 

Beginning the incorporation process may be easier than you think. The first step is getting the necessary paperwork. You can obtain a copy of the articles of incorporation by contacting the Secretary of State’s office. Sometimes, you can find the paperwork online through the Secretary of State’s website. Once you have the paperwork, you can begin filling it out. After turning in the articles of incorporation, you can get copies by paying a fee.

What is a certificate of incorporation?

Some states refer to articles of incorporation by a different name. A certificate of incorporation is the same thing as articles of incorporation. States like Delaware prefer to call articles of incorporation a “certificate of incorporation.” All of the same information is required as if you were filling out articles of incorporation.

Why become incorporated?

You may wonder why anyone would bother going through this extensive process to become “incorporated.” The advantages generally outweigh the disadvantages. First of all, incorporating your business establishes the company as a legitimate and financially sound organization, which can attract investors and business partners. 

Second, it sets the business as a separate entity from the owners. This is essential if the firm incurs debts and fails. An entrepreneur won’t go bankrupt because their company didn’t work out. Creditors who file a suit against the company cannot attack the owner’s personal assets. 

Finally, there are significant tax benefits to business owners. Some corporate structures allow what’s called “pass-through” taxation, which allows the business and personal income taxes to be combined. Incorporating your business also allows you to qualify for several business tax deductions, which can decrease the amount you owe each year. According to the Internal Revenue Service, you can deduct expenses used to figure the cost of goods sold, capital expenses, and personal expenses. 

Last Updated: December 12, 2018