Purpose of Business Formation Documents
Starting a business involves numerous legal aspects that must be addressed properly. Among these, formation documents stand out as the foundation upon which your business structure is built.
Understanding Formation Documents
Formation documents legally create and outline the structure of your business entity. These documents are filed with the relevant government agency and provide information about your business’s purpose, ownership, management, and other details.
Types of Formation Documents
- Articles of Incorporation/Articles of Organization: Articles of Incorporation are for corporations, Articles of Organization are for limited liability companies (LLCs).
Common Business Formations
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Limited Liability Company (LLC): Combines limited liability protections with changeable management and tax benefits.
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Certificate of Incorporation: Provides state with necessary information on your corporation business. Outlines business name, address, purpose, ownership percentages and shares. Specifies management roles and initial investments made.
Business formation documents prove a business is properly licensed to operate – both to governments and to companies seeking partnerships. Different types of companies sometimes need different business formation documents. They provide information on purpose, ownership, management, and other details. Most businesses also need a Tax ID and Business Name Registration.
To form a corporation, Articles of Incorporation must be filed with the state. These contain the name, address, purpose, and registered agent. Using an agent means legal and tax documents go to them rather than customers. Agents need physical addresses. Locations can change without necessarily filing more paperwork.