A corporation is a type of business entity you form through the filing of a legal document known as articles of incorporation (Articles). These are filed in the state you want to do business from. The Articles may also be referred to as your “corporate charter,” “articles of association,” or “certificate of incorporation.”
Articles outline the governance of your business, along with your bylaws and applicable state statutes. Amending the Articles generally requires board and stakeholder approval.
Articles are filed with the agency your chosen state designates, generally the “Secretary of State” or “Division of Corporations.” There is a fee for filing. These vary state to state. After filing, you corporation is recognized as a legal entity in the United States.
States differ in their regulatory and tax environments; consequently, you find states such as Wyoming, Nevada and Delaware attracting more than half of the publicly held corporations in the United States since these states favor management and limit stakeholder rights (providing asset protection) in certain instances. Wyoming, further to this, has no corporate or individual income taxes, and Wyoming’s corporate maintenance fees are substantially less than many states. Wyoming also eliminates most corporate formalities through its “close” corporate act. This further reduces maintenance fees in that state. Finally, Wyoming allows the directors and stakeholders to maintain their anonymity
Articles typically include the following:
- Corporate name and address;
- Registered agent’s name and address, which must be kept current;
- Corporate structure (profit or non-profit, non-stock, professional, close);
- Names and addresses of initial board members;
- Number of shares; types of stock (common and preferred), par value, if any, and whether certificates for shares will be issued;
- The corporate business purpose, usually “any legal purpose” will suffice;
- Duration of existence, generally perpetual;
- Delegation to bylaws of various corporate matters; and
- Name, signature, and address of the person setting up a corporation, the incorporator.
You may want to provide other provisions in your Articles such as:
- Limiting directors’ liability;
- Allowing actions by stakeholders and directors without a meeting; and
- Designating someone with authority to call special meetings of stakeholders and directors.
Articles are publicly available. For this reason, you should only provide the minimum information required by the state and delegate all other matters to your bylaws, which are not public.
Being a United States citizen is not a prerequisite for incorporating in any state.
Finally, on filing your Articles, your business is authorized to do business in that state. If you do business in another state, you must register as a “foreign corporation” in that state. This typically involves filing your Articles from your state of formation and the filing of a form undertaking to provide the information required by the state in which you propose doing business. Additional fees and a registered agent will be required as well.