1. What Is a Limited Liability Company?
2. What Is a Corporation?
3. What Are Articles of Organization?
4. What Are Articles of Incorporation?
5. Why Do I Need to File Articles of Incorporation?
6. Articles of Organization vs. Articles of Incorporation
7. Why Are Corporate Formalities Important?

Are articles of incorporation the same as articles of organization? The specific filing requirements are similar, but each aims to establish a different type of business.

What Is a Limited Liability Company?

A limited liability company, or LLC, is often used by its owners to limit the amount of personal liability that they have for the company. The members of the business can be individuals, partners, or corporations.

A limited liability company is also frequently used when establishing a new business because it is affordable and professional. In addition, a limited liability company protects its owners from losing their personal assets. Filing an LLC can be done easily by submitting the required documents to the state authorities where the business will operate.

What Is a Corporation?

A corporation differs from a limited liability company in a few ways. The owners of a corporation are considered shareholders. They establish the business as a corporation to limit the personal liability of each owner.

The business is its own entity, and liability affects only the business, not the individual shareholders. Filing for a corporation requires that the shareholders complete the necessary paperwork and leave it on file. There are a few types of corporations, and each type must be documented with limited liability paperwork:

  • C Corporations
  • S Corporations
  • Limited Liability Companies
  • Limited Partnerships

What Are Articles of Organization?

Articles of organization are used to provide company registrars with necessary information about the business. Every state has different laws as to what is required to file a new business. However, the following articles of organization are often needed:

  • Business name
  • Name of the registered agent
  • Address of the main business location
  • Duration of formation
  • Contact information of the business
  • Purpose of the company (may be required in some states)

What Are Articles of Incorporation?

Articles of incorporation are sometimes called a "certificate of incorporation" or a "corporate charter." The following information is needed to file articles of incorporation:

  • Corporation name
  • A list of the board of directors
  • Amount of shares authorized
  • Name and address of the registering agent
  • Name and address of each business partner in the corporation
  • Purpose of the company (may be required in some states)
  • Information as to profitability (may be required in some states)

Articles of incorporation are public, so it is important to omit any confidential business information. It is also important to keep in mind that each state will have different filing requirements. Checking the local state website can provide you with an updated list of required documents.

Why Do I Need to File Articles of Incorporation?

Incorporating these documents is an important step in legalizing the business. Having the required articles of corporation filed is necessary for:

  • Setting up a business bank account
  • Applying for business loans
  • Creating a legal identity that protects each partner's personal assets and finances

Articles of Organization vs. Articles of Incorporation

The content of the articles of organization and the articles of incorporation are somewhat similar in terms of the information included. The biggest difference, however, is that each serves a different purpose.

Whereas articles of organization are used to establish an LLC, articles of incorporation are used to create a corporation. An attorney might be useful in both situations to ensure that the articles are accurately drafted. Also, articles of organization require just one registered agent, whereas articles of incorporation require three.

Why Are Corporate Formalities Important?

Both articles of organization and articles of incorporation legalize and formalize a business. Corporate formalities are important in protecting the business owners from liability. If the LLC or corporation does not meet the requirements of the state, the owner's personal assets and finances could be at risk. Formalizing the business protects the business owners.

In order to be protected from liability, the business requires the following:

  • Business bylaws
  • A registered agent
  • An operating agreement
  • Organizational meeting minutes
  • A federal identification number
  • A corporate book with a record of meeting minutes
  • Organization filings including the articles of documents or the articles of incorporation

A business that does not have each of these requirements runs the risk of personal belongings being included in a liability matter. The fee for filing an LLC or incorporation is minimal, usually between $35 and $300, which is well worth the cost of the liability protection afforded.

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