Incorporation Certificate: Everything You Need to Know

An incorporation certificate is an important element for any business. Mainly, it allows shareholders to steer clear of personal liability.3 min read

An incorporation certificate is an important element for any business. Mainly, it allows shareholders to steer clear of personal liability. With this assurance, shareholders only risk the amount of money they paid for their stock.

Every year, hundreds of thousands of businesses seek incorporation certificates. To no surprise, the largest businesses across the globe are fully incorporated.

Incorporation Certificate

To conduct business, a nonprofit organization needs:

  • Articles of incorporation.
  • Board minutes.
  • Bylaws.

Articles of incorporation are filed with the secretary of state, sometimes referred to as the department of state. No matter where you live, the articles of incorporation are necessary to establish a for-profit business. They register your company's name, and they establish your intent to carry out business as a domestic entity. Once the state approves your application, you will be eligible to hold your first board meeting and begin operating.

Key Elements of the Articles of Incorporation

You only want to include a few basic elements in your articles of incorporation. Businesses who establish in-depth articles of incorporation make it more difficult to change the corporate structure later on. It is best to keep the articles of incorporation short and your bylaws long and detailed. Here are some of the key elements you will want to include:

  • Corporate name.
  • Corporate address.
  • Type of corporation.
  • Purpose.
  • Duration.
  • Director information.
  • Registered agent.
  • Share structure.

When you indicate your corporate name, be sure to include the exact spelling and punctuation, as well as any identifiers, such as "Inc." or "Co." In many states, you can search online at the secretary of state's website to see if your name is available. Also, make sure your name doesn't sound too similar to an already-existing business.

As for your corporate address, you cannot use a post office box. This must include an address for the physical office. If you would like to use a post office box for mailing purposes, that's fine. However, you will be required to indicate a physical address.

When you describe the purpose of your business, keep it broad. Some businesses simply indicate their purpose is to conduct lawful activity. You can also choose to add a more specific purpose.

Once you have incorporated your business, it can go on forever. However, in certain instances, corporations only need to exist for a fixed amount of time. If that is the case, this is where you will indicate the end date. Otherwise, feel free to set your duration as "perpetual."

A registered agent will be required. You'll need to provide his or her full name and address for official correspondence. You may want to ask your registered agent to fill out a Consent of Registered Agent form to make sure everyone is clear about the duties and responsibilities.

At a minimum, a registered agent is responsible for correspondence between the state and the corporation. This includes legal documents, notices, and even lawsuits. A director or another officer of the corporation may act as a registered agent, but the corporation itself may not.

An email address is an optional detail to include. States are moving forward with official electronic correspondence, so it may be helpful to include an official email address for the corporation. Of course, each state maintains its documents differently, so you'll want to check with the department of state.

As for share structure, state law requires that for-profit organizations outline their share classes. This means you must indicate the number of share classes, the various shares that will be included in each class, and the par value of each share.

Additional Elements of the Articles of Incorporation

In addition to the crucial elements outlined above, you will also need to indicate the number of directors you plan to have at the onset. This bit of information is optional in every state except Maryland. That number may change as the years progress, as indicated in your corporate bylaws.

If you choose to disclose this information, you'll need to provide the full name and address of each director at the onset. Since this will go on to become public knowledge, you will want to use the business's official mailing address.

If you need help with your incorporation certificate, you can post your legal need on Legal Marketplace's marketplace.

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