What are Articles Of Incorporation.

What Are Articles Of Incorporation?

Anyone who steps into the world of business in the Americas, must have come across the term Articles of Incorporation. But what are articles of incorporation? They are simply legal documents that need to be filed with the territorial, provincial, or federal government, which underlines the basic functioning of and the purpose of your business. This document is mandatory to the process of incorporation.

You can get the form for filing the articles of incorporation of your company from government bodies such as the office of the secretary of state of the concerned state. Such offices even have websites, which allow you to download this form, which you may require to incorporate your business. For filling out the form in accordance with articles of incorporation law, you can take the help of samples of articles of incorporation or articles of incorporation examples and then take the help of an attorney to check the correctness and for filing it. So, through the attorneys help you will get to know as to how to file articles of incorporation. After filing, the articles of incorporation document creates your corporation. It also sets out important details such as the number of directors and the type of shares that the company will issue.

So now you may wonder as to why the incorporation of your business is so essential. There are several advantages to incorporating your business. They are as follows:

Limited liability: An incorporated company has limited liability. In other words, an individual share holder's liability is limited to the amount that he/she has invested in the company. In the case of debts, if you are a sole proprietor, your personal assets, such as your house and car, may be seized to pay the debts. However, if you are a share holder, you cannot be held responsible for the debts accumulated by the corporation, unless of course, you have given a personal guarantee. A corporation however, has all the benefits that an individual has that include the ownership of property. Corporations carry on: Incorporation of a business also ensures its continuance. A corporation typically has an unlimited life and continues to thrive even with a change of ownership or business.

Money raising made easier: Corporations typically have more ability to raise money and this ensures the constant growth and development of your company. While they can borrow and incur debt like a normal individual they also have options to sell shares, and raise equity capital. Typically, equity capital does not have to be repaid and also does not incur interest. However, issuing shares may lower your ownership percentage in a company.

There are several other benefits to incorporating a company. This includes income control, potential tax deferral, income splitting and increased business. For small companies, there is the added possibility of being eligible for small business tax deduction. This is an annual tax credit which is calculated at $16,000 on the first $200,000 of the income that is taxable. This may just be a much lower tax rate than the one applied to your personal income.

So now that we know what are articles of incorporation and their many benefits, your business will be better off by being incorporated and it will also ensure a smooth and headache-free corporate life for yourself.