Incorporating a business, whether for a corporation or a limited liability company (LLC) is a fairly straightforward process — as long as you’re organized and have all the documents you need. Understanding each document that’s required and when you’ll need to submit it is the best route to a fast, painless business incorporation.
Here are the incorporation documents that every small business should know when registering their business entity.
Incorporation documents for corporations
1. Articles of incorporation
Articles of incorporation are the foundational document for C corporations and S corporations. You have to file these documents with the state for your corporation to exist. Articles of incorporation vary across states, but typically include the following:
- Business’s name, address and principal place of business.
- Purpose of the corporation.
- Number and type of shares (if the corp is issuing stock).
- Names and addresses of the initial board of directors.
- Registered agent for the corporation (person or company who will accept official mail and legal papers on the company’s behalf).
- Name, address, and signature of the incorporator who is submitting the form (usually you, your attorney, or an incorporation service if you’re using one).
All states charge a fee (ranging from approximately $35 to $300) to process the articles of incorporation. You’ll receive a certified copy of the articles that confirms you’re approved to do business in the state.
2. Corporate bylaws
Corporate bylaws lay out how the shareholders, officers and directors will split control within the organization and manage it on a day-to-day basis. Along with the articles of incorporation, corporate bylaws are the main organizational document for a corporation.
Corporate bylaws usually contain the following info:
- Basic business information, like name, address and principal place of business.
- Frequency and procedures for shareholder meetings, board meetings and annual meetings.
- How directors and officers will be elected and replaced when there are vacancies.
- Types of officers (e.g. CEO, CFO, CMO) and their responsibilities.
- Procedure for the board of directors to adopt resolutions.
- Procedure for corporate record keeping, including frequency of audits.
- Procedure for amending the articles of incorporation and bylaws.
- Number, type and authority to issue shares of stock.
- Dissolution process.
Although many people confuse the articles of incorporation and bylaws, they serve different purposes. Articles of incorporation set up a skeletal outline for the corporation, whereas the corporate bylaws include details for managing and running the corporation on a daily basis.
3. Stock certificate (stock-issuing corps only)
A stock certificate is a piece of paper that records the sale and purchase of shares in the corporation. Stock certificates were traditionally physical pieces of paper, but most companies now back them up with digital versions. The certificate will specify the business’s name, the shareholder’s name, the date of the sale, the signature of the board member who authorized the sale of stock and the company’s seal.
Shareholder agreements capture shareholder rights and responsibilities that aren’t mentioned in the corporate bylaws.
The shareholder agreement will typically specify a number of things:
- How owners can sell their shares should they choose to exit the corporation.
- What happens to an owner’s shares when they pass away or if they become disabled.
- How and when the corporation will issue dividends.
- The number, type and value of shares.
- Which board measures require shareholder approval and what percentage of shareholders need to approve.
Not every small business will need a shareholder agreement, and no states require a business to have one. However, if your corporation has multiple owners, it’s a good idea to have a written shareholder agreement.
5. Form S-2553 (for S corp election)
To qualify your business as an S corporation, you have to file Form S-2553-Election by a Small Business Corporation with the IRS. S corporations differ from ordinary C corporations in a few ways, but the main way is taxation. C corps are subject to “double taxation.” Owners pay a corporate income tax, and shareholders have to pay taxes on dividends on their personal tax returns. In contrast, S corps are pass-through entities. Business income and profits flow through to the owners’ personal tax returns and are taxed at the owners’ personal income tax rates.
Without filing Form S-2553, your business cannot be an S corporation and will continue to be taxed as a C corp. The deadline for filing the form is in the first 75 days of the tax year you want the S corp election to take effect or in the year preceding the year that you want your S corp election to take effect.
Incorporation documents for LLCs
1. Articles of organization
The articles of organization for LLCs are the equivalent of the articles of incorporation for corporations. They officially establish your LLC in the state that you’re registering in. The articles of organization contain basic business information such as:
- Business’s name, address, and principal place of business.
- Purpose of the LLC.
- Name and address of initial members or managers of the LLC.
- Registered agent for the LLC (person or company who will accept official mail and legal papers on the company’s behalf).
- Name, address and signature of the filer (usually you, your attorney or an incorporation service if you’re using one).
All states charge a fee to process the articles of organization. After processing your form, the state will send you a certified copy of the articles confirming your LLC is approved to do business in the state.
» MORE: LLC vs. corporation
2. Operating agreement
An operating agreement is similar to the bylaws for a corporation. The operating agreement sets out in detail the structure of the LLC and the day-to-day management processes.
An operating agreement generally contains the following things:
- Whether your LLC will be member-managed, manager-managed or both.
- The rights and responsibilities of each member and manager.
- How to handle member or manager vacancies.
- How to admit additional members.
- How to handle a member selling their shares in the business.
- Methods for raising additional capital.
- Procedure for amending the articles of organization and operating agreement.
- Dissolution procedures.
Only a handful of states (California, Delaware, New York, Maine, Missouri) require LLCs to create an operating agreement, and no state requires you to file one. But it’s important to have one to map out how you’ll do business and avoid disputes down the line. It’s best to store your agreement with other important business records.
Incorporation documents for both corporations and LLCs
1. Business name reservation form
A business name reservation form is exactly what it implies — it allows you to reserve a unique name for your business while you complete the incorporation process. This is helpful because two businesses can’t have the same name in the same locality if it would cause confusion to consumers. For example, two restaurants can’t be called Tasty Food LLC or Tasty Food Inc.Most secretary of state offices have an online name search that you can use to find out which business names are available. If the business name you want to use is available, then you can ask the state to “reserve” it for a certain amount of time — usually 60 to 120 days. No other business owners will be able to claim that name during that time period.
2. Meeting minutes (corps only, but beneficial for LLCs)
All states require corporations to maintain and safely store corporate records so there’s a paper trail for government audits and other legal purposes. Meeting minutes are one of the most important corporate records because they document important company decisions. You should keep minutes during all formal meetings — shareholder, board and annual meetings.
These are some things to you should memorialize in meeting minutes:
- Date, name of everyone present and if there’s a sufficient quorum to make binding decisions on behalf of the corporation.
- Election of a new director or appointment of a new officer.
- Resignation of a director or officer.
- Corporation takes out a business loan.
- Corporation enters into an important contract.
- Corporation purchases business insurance.
- Stock transactions.
Under state laws, only corporations are generally required to keep meeting minutes. However, it’s a good idea for owners of both LLCs and corporations to keep extensive meeting minutes. They may be useful if the government audits you or someone sues your business.
3. Board resolutions (corps only, but beneficial for LLCs)
Board resolutions document and formalize board decisions and show how directors voted on different matters affecting the company. These records are important for compliance reasons if a board’s decision is, for example, ever called into question in a lawsuit or during an audit.
It’s a good idea to have a board resolution for each of the following types of business decisions:
- Hiring new officers.
- Selling shares in the corporation.
- Acquiring another company or a part of it.
- Channeling corporate funds to an important project.
- Approving a business loan.
- Approving a contract.
While resolutions aren’t required for LLCs, it’s wise to keep a record of important decisions in case of a dispute in the future.
4. Annual report
In most states, registered business entities must file an annual report by a certain date every year and pay an annual tax or processing fee. Without filing your annual report, you cannot maintain approval to do business in the state.
Each state requires different information in an annual report, and you can find out the requirements in your state by contacting your business’s secretary of state office.
Usually, it’s just very basic information to keep the state up to date on your company, like the business’s address, names and addresses of the owners and registered agent information.
A version of this article originally appeared on Fundera, a subsidiary of NerdWallet.
