What Are S Corporation Articles of Incorporation?
S corporation articles of incorporation are the documentation needed to file when forming an S-corp with the agency that governs the corporations in your state.3 min read
S corporation articles of incorporation are the documentation needed in order to file when forming an S-corporation with the agency that governs over corporations in your state. The information you put in the document describes your business and gives the state the necessary information required.
Other Names for Articles of Incorporation
The document used to file both C corporations and S corporations goes by the name Articles of Incorporation, and it's also called:
- Certificate of Incorporation
- Business Incorporation Papers
- Corporate Charter
- Company Constitution
What an S Corporation Is
An S Corporation is another name for a subchapter of an eligible C corporation or LLC. It's taxed as a small business. The effect of being taxed as a small business is the pass-through effect that passes the income from profits and losses directly to shareholders to be taxed as their personal income. S corporations avoid the double taxation that impacts C corporations by passing earnings through to shareholders this way. LLCs and C corporations that have up to 100 individual shareholders who are either U.S. citizens or who identify as permanent U.S. residents.
Filing Articles of Incorporation
Each state has its own minimum requirements regarding the information you have to include when filing articles of incorporation. The minimum requirements can typically be met by filling out a form provided by the filing agency's website. While your company's Articles of Incorporation can be long and detailed, they can also be short and simple. Having the document filed with the state is more important than the length of the document. After the document is filed it becomes public record, so anyone interested can see the details of your business.
Choosing a State to File Articles of Incorporation
The most common choice is for business owners to file for incorporation in their home state because it keeps the number of reports to file down. It also lets them avoid making payments to more than one state. There are times, however, when it makes sense to incorporate in a different state than your home state. For example, incorporating in a state that's especially friendly to businesses, like Delaware, is a good idea if you plan to do business on a national level.
Information Usually Required on a Certificate of Incorporation
The information you have to include in your articles of incorporation varies by state, but there are some pieces of data that are common for most states.
- Your chosen corporate name
- The purpose of your business
- The corporation's duration
- The corporation's registered agent
- The corporation's incorporator
- Corporate bylaws
- The number of authorized stock shares
- Par value of each share
- Whether preferred shares will be issued
- Contact information for the corporation's directors
- The identity of the corporation's officers
- Indemnity information regarding the corporation's officers
- The company's legal address
Advantages of Incorporating a Business
The articles of organization are required for incorporating a company, and there are a number of benefits that make filing for this worthwhile. Some of the benefits of incorporation include:
- Personal asset protection: Incorporating your business separates your personal assets from the business so the company's creditors can't attack your personal assets, and legal action can't be directed at you personally.
- Tax management: Incorporating offers you options regarding how income is taxed and how deductions may be calculated.
- Ease of raising capital: When a corporation needs to raise capital quickly, issuing shares of stock is an option.
- Loan appeal: Incorporating gives your business separate legal entity status, which lenders often find more appealing.
- Credibility in the marketplace: Incorporation lends credibility to your company, and this increases consumer confidence when your products and services enter the marketplace.
Leadership and Meetings
Having a leadership team is a requirement for an S corporation, and that leadership must hold shareholder meetings and director's meetings. This means a record of each meeting's minutes has to be filed in the internal records the corporation maintains. When any stock is transferred or the company makes updates to its bylaws, there are formal procedures to follow regarding those changes. It's also required that any shareholder who works for your corporation also receives a salary that's an appropriate market wage for the work performed.
If you need help with S corporation articles of incorporation, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.