Question 1

What are articles of incorporation?

Accepted Answer

Articles of incorporation (also called a certificate of incorporation in Delaware and some other states, or a charter in certain jurisdictions) are the formal legal document filed with a state's Secretary of State to create a corporation as a legal entity. This filing establishes the corporation's existence separate from its founders and shareholders, providing them with limited liability protection. The articles contain the corporation's essential information — its name, purpose, authorized stock, registered agent, and incorporator — and become part of the public record. Once the state accepts the articles, the corporation exists as a legal person that can own property, enter contracts, sue and be sued, and continue in perpetuity regardless of changes in ownership.

Question 2

What is the difference between articles of incorporation and corporate bylaws?

Accepted Answer

Articles of incorporation and corporate bylaws serve fundamentally different roles in the corporate governance framework. The articles of incorporation are filed with the state, become a public record, and establish the corporation's legal existence — they contain the basic structural provisions required by statute, such as the corporate name, authorized shares, registered agent, and purpose. Corporate bylaws are an internal, private document adopted by the board of directors that provides the detailed rules for day-to-day governance — including the procedures for electing directors, calling meetings, appointing officers, declaring dividends, and amending the bylaws themselves. Amending the articles requires a state filing (and often shareholder approval), while bylaws can typically be amended by a board resolution. Both documents are essential: the articles create the corporation, and the bylaws govern how it operates.

Question 3

How much does it cost to incorporate?

Accepted Answer

The cost of filing articles of incorporation varies by state. Filing fees range from $50 in some states (such as Arkansas and Mississippi) to $300 or more in states like Texas and Massachusetts. Delaware, the most popular state for incorporation, charges a minimum of $89 for the filing plus a franchise tax based on the number of authorized shares or the assumed par value capital method. Beyond the filing fee, you should budget for: a registered agent service ($50-$300 per year), certified copies of the articles ($10-$30), corporate bylaws drafting, stock certificates, the corporate seal (if desired), the initial organizational meeting, and any state-specific requirements. If you hire an attorney to handle the incorporation, legal fees typically range from $500 to $2,500 depending on the complexity of your corporate structure.

Question 4

Should I incorporate in Delaware?

Accepted Answer

Delaware is the most popular state for incorporation — more than 60% of Fortune 500 companies and the vast majority of venture-backed startups are incorporated there. Delaware's advantages include: a highly developed and predictable body of corporate case law (the Court of Chancery specializes exclusively in corporate disputes); a business-friendly statute (the Delaware General Corporation Law) that offers maximum flexibility in corporate governance; no requirement that directors, officers, or shareholders be Delaware residents; no state income tax on corporations that do not operate within Delaware; and well-established procedures for handling complex corporate transactions. However, Delaware incorporation makes most sense for businesses that plan to raise venture capital, go public, or have complex capital structures. For small businesses operating in a single state, forming in your home state is usually simpler and less expensive because you avoid the cost of registering as a foreign corporation in your home state.

Question 5

How many shares should I authorize?

Accepted Answer

The number of authorized shares is a strategic decision that affects your corporation's flexibility and, in some states, your filing fees and franchise taxes. Most startups authorize 10 million shares of common stock — this provides enough shares to issue to founders, allocate to an employee stock option pool (typically 10-20% of authorized shares), and accommodate future investment rounds without needing to amend the articles. However, authorizing more shares increases franchise taxes in some states (particularly Delaware, where the franchise tax can be calculated based on authorized shares). A common approach is to authorize 10 million shares of common stock at $0.001 par value and a smaller number of preferred stock shares (such as 5 million) to be designated later for investor rounds. If you are forming a small, closely held corporation with no plans for outside investment, a smaller authorization (such as 1,000-10,000 shares) is perfectly adequate.

Question 6

What is the difference between authorized, issued, and outstanding shares?

Accepted Answer

These three terms describe different categories of corporate stock, and understanding the distinction is essential for proper corporate governance. Authorized shares are the maximum number of shares the corporation is permitted to issue, as specified in the articles of incorporation. Issued shares are the shares that have actually been distributed to shareholders — a corporation cannot issue more shares than it has authorized without amending its articles. Outstanding shares are the issued shares that are currently held by shareholders (issued shares minus any shares the corporation has repurchased or reacquired as treasury stock). For example, a corporation might authorize 10 million shares, issue 3 million to founders and investors, and later repurchase 200,000 shares — resulting in 10 million authorized, 3 million issued, and 2.8 million outstanding. Only outstanding shares carry voting rights and dividend entitlements.

Question 7

Can I change the articles of incorporation after filing?

Accepted Answer

Yes, you can amend the articles of incorporation by filing articles of amendment (or a certificate of amendment) with the Secretary of State. Common reasons for amendment include: increasing the number of authorized shares, creating a new class of stock (such as preferred stock for an investment round), changing the corporate name, changing the registered agent or registered office, expanding or narrowing the corporate purpose, and adding or removing specific provisions. Most states require that an amendment be approved by the board of directors and then by a majority (or supermajority, depending on the provision being amended) of shareholders entitled to vote. The amendment must be filed with the state along with the applicable filing fee. Some amendments — particularly those affecting shareholder rights — may also require notice to shareholders and a formal shareholder vote at a meeting or by written consent.

Question 8

What is par value and does it matter?

Accepted Answer

Par value is the minimum price at which a corporation can issue a share of stock. Historically, par value was meant to protect creditors by ensuring that the corporation received at least a minimum amount of capital for each share issued. Today, par value has largely lost its practical significance — most modern corporations set par value at a nominal amount such as $0.001 or $0.0001 per share, or use no-par-value stock (permitted in most states). However, par value still has some legal implications: shares cannot be issued for less than par value (doing so creates 'watered stock' liability for the directors who authorized the issuance), and in Delaware, the franchise tax can be calculated using an 'authorized shares method' or an 'assumed par value capital method' — setting a very low par value allows the corporation to use the more favorable assumed par value method and significantly reduce its franchise tax. Most startup attorneys recommend using $0.0001 par value stock for this reason.

Question 9

Who are the incorporators and what is their role?

Accepted Answer

The incorporator is the person (or entity, in some states) who signs and files the articles of incorporation with the state. The incorporator does not need to be a future shareholder, director, or officer of the corporation — many people use their attorney, accountant, or a corporate formation service as the incorporator. The incorporator's role is limited and temporary: they sign the articles, file them with the state, and then typically hold an organizational meeting (or take action by written consent) to appoint the initial board of directors, adopt the corporate bylaws, authorize the issuance of stock, and take other organizational actions. Once the board is appointed and organizational actions are complete, the incorporator's authority ends. Some states allow the articles to name the initial directors directly, which reduces the incorporator's organizational role.

Question 10

What is the difference between a C-Corp and an S-Corp?

Accepted Answer

A C-Corp and an S-Corp are not different types of corporations in terms of state corporate law — both are formed by filing articles of incorporation. The difference is a federal tax election. A C-Corp is the default tax classification: the corporation pays corporate income tax on its profits, and shareholders pay personal income tax on dividends received, resulting in 'double taxation.' An S-Corp files an election with the IRS (Form 2553) to have corporate income, losses, deductions, and credits 'pass through' to shareholders' personal tax returns, avoiding double taxation. However, S-Corp status comes with restrictions: maximum of 100 shareholders, only one class of stock (though voting/non-voting variations are permitted), shareholders must be U.S. citizens or residents (no foreign shareholders), and certain entity types cannot be shareholders. Most venture-backed startups use C-Corp status because investors (particularly VCs) prefer it and the ownership restrictions of S-Corps are incompatible with typical funding structures.

Question 11

How do I incorporate a nonprofit organization?

Accepted Answer

Incorporating a nonprofit requires filing articles of incorporation that include specific provisions required for tax-exempt status. In addition to the standard information (name, registered agent, incorporator), nonprofit articles must include: a statement that the corporation is organized exclusively for charitable, educational, religious, scientific, or other exempt purposes under IRC Section 501(c)(3); a prohibition on distributing net earnings to any private shareholder or individual (the 'private inurement' prohibition); a limitation on political and lobbying activities; and a dissolution clause directing that remaining assets upon dissolution be distributed to another exempt organization or to the government. After filing the articles with the state, the nonprofit must apply to the IRS for tax-exempt status using Form 1023 (or Form 1023-EZ for smaller organizations). Most states also require a separate state tax exemption application.

Question 12

What is a benefit corporation?

Accepted Answer

A benefit corporation is a for-profit corporate structure that legally requires the company to pursue a positive impact on society and the environment in addition to generating profit for shareholders. Unlike a traditional corporation where directors' fiduciary duties run primarily to shareholders, benefit corporation directors must also consider the impact of their decisions on employees, community, and the environment. As of now, approximately 40 states have enacted benefit corporation legislation. Key requirements include: stating a general or specific public benefit purpose in the articles of incorporation, considering the impact on all stakeholders (not just shareholders) in decision-making, and publishing an annual benefit report assessing the corporation's social and environmental performance against a third-party standard. A benefit corporation is different from a Certified B Corporation (B Corp), which is a private certification issued by B Lab — a corporation can be one, both, or neither.

Question 13

Do I need a lawyer to file articles of incorporation?

Accepted Answer

You are not legally required to hire a lawyer to file articles of incorporation — the process can be completed by any individual serving as the incorporator. State filing offices are designed to accept filings from the public, and many provide fill-in-the-blank forms or online filing systems. However, an attorney is strongly recommended if: you are incorporating in Delaware or forming a corporation in one state while operating in another; you are raising capital from investors and need to structure multiple classes of stock; you are forming a nonprofit and need to satisfy IRS requirements for tax-exempt status; you have multiple founders and need to address vesting schedules, intellectual property assignment, and shareholder agreements; or you need to comply with securities laws when issuing stock. For a simple single-owner corporation operating in one state, our attorney-reviewed templates provide a reliable and cost-effective alternative to hiring counsel.

Feature	Corporation	LLC	Partnership
Liability Protection	Full (shareholders)	Full (members)	None (general partners)
Default Tax Status	Double taxation (C-Corp)	Pass-through	Pass-through
Ownership Transfer	Freely transferable (stock)	Restricted (by agreement)	Restricted (by agreement)
Management	Board + Officers (rigid)	Flexible (member/manager)	Partners (flexible)
Raising Capital	Stock issuance, IPO eligible	Membership interests	Partner contributions
Existence	Perpetual	Per operating agreement	May dissolve on withdrawal
Equity Compensation	Stock options (ISO/NSO)	Profits interests (complex)	Profits interests
Formation Document	Articles of Incorporation	Articles of Organization	Partnership Agreement

Free Articles of Incorporation Forms

What Are Articles of Incorporation?

Limited Liability

Capital Raising

Perpetual Existence

Articles of Incorporation Form Preview

Articles of Incorporation

Article I: Corporate Name

Article II: Registered Agent & Office

Article III: Authorized Capital Stock

Article IV: Purpose

Article V: Directors

Incorporator

Types of Corporations

C-Corporation

S-Corporation

Nonprofit Corporation

Professional Corporation

Corporation vs LLC vs Partnership

How to File Articles of Incorporation

Choose Your State and Corporate Type

Plan Your Capital Structure

Designate a Registered Agent and File

Hold the Organizational Meeting

Complete Post-Incorporation Compliance

Key Components of Articles of Incorporation

Corporate Identity

Capital Structure

Directors & Officers

Protective Provisions

Legal Requirements for Articles of Incorporation

Model Business Corporation Act (MBCA)

Director Liability Limitation (Section 102(b)(7))

Key State Variations

Sample Articles of Incorporation

CERTIFICATE OF INCORPORATION

Frequently Asked Questions

Official Resources

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