What are Articles of Incorporation? A Legal Guide for US Startups

Your charter (Articles of Incorporation or Certificate of Incorporation for a corporation, or Articles of Organization or Certificate of Formation for a limited liability company) is the cheapest document your company will ever file and one of the more expensive ones to get wrong.

In Delaware the filing costs a minimum of $109 and can clear in a day. The choices inside it decide how many shares you can issue, what your annual franchise tax bill looks like, and whether your stock can qualify for the Section 1202 exclusion.

Think of the charter as tooling. A manufacturer sets the tooling before the run starts, because changing it mid-run stops the line. You can amend a charter. You cannot amend it unilaterally once investors hold stock.

This guide covers:

• What Articles of Incorporation (a/k/a Certificate of Incorporation) are (is)

• The difference between a Certificate of Formation and Certificate/Articles of Incorporation

• How Articles of Incorporation differ from Articles of Organization

• What information goes into the charter document

• The steps to file in the US

• The benefits of incorporating a startup

• Common mistakes, and what they cost

• What happens if you never file

• Whether you need a lawyer

What are Articles of Incorporation?

A Certificate of Incorporation is (and in some states, Articles of Incorporation are) the document that creates a corporation, filed with the corporate filing office of the state you choose. Lawyers often call it the charter. It sits at the top of your governance stack, above the bylaws and above every board and stockholder resolution, and nothing below it can contradict it.

The document itself is relatively short. It names the corporation, identifies a registered agent and a registered office in the state of incorporation, states the corporate purpose, sets the number, par value and rights of each class of authorized shares, and names the incorporator who signs it.

Terminology varies by state, and the variation matters when you are searching a filing portal. Delaware, New York and New Jersey use “Certificate of Incorporation.” Most other states use “Articles of Incorporation.” Massachusetts corporations file “Articles of Organization” under M.G.L. c. 156D, which is the same phrase most states reserve for LLCs.

What is the difference between a Certificate of Formation and Certificate of Incorporation?

A Certificate of Incorporation forms a certain type of legal company, the corporation. A Certificate of Formation forms an LLC. These terms are used in Delaware, the most common state for both incorporation and formation, but not in most states. 

The choice that matters is the entity, not the paperwork:

• LLC: taxed as a pass-through by default, with economics set by an operating agreement rather than by stock. It suits a business that distributes cash to a single owner or a small, stable group of owners.

• Corporation: issues stock, has a board, and runs on a governance framework that outside investors already recognize. Venture funds generally prefer corporate stock, partly because LLC interests can pass unrelated business taxable income through to their tax-exempt limited partners, and partly because they stand to obtain tax advantages from buying and holding corporate stock.

If you plan to grant employee options or raise a priced round, the corporation is the practical choice, and the corporate formation work is easier to do once than to unwind later.

How do Articles of Incorporation differ from Articles of Organization?

Most states use the term Articles of Incorporation to refer to a charter filed to form a corporation and Articles of Organization for one filed to form an LLC. As noted above, the contents differ because the entities differ. The corporate filing covers authorized shares, par value and (sometimes) initial directors. The LLC filing covers the registered agent and, in some states, whether the company is member-managed or manager-managed.

An LLC can convert to a corporation later, and many do before a first priced round. The conversion costs legal and tax work, and the holding period for Section 1202 starts when the stock is issued rather than when you started the LLC. If a venture round is likely within a year, incorporating at the outset is usually the cheaper path.

What information is typically included in Articles of Incorporation?

• Corporate name: it must be distinguishable on the state’s records and carry a corporate signifier such as Inc., Corporation or Incorporated. Clearing the name with the state says nothing about trademark rights, so search the USPTO register separately.

• Registered agent and registered office: a named agent at a street address in the state of incorporation, able to accept service of process. A PO box will not satisfy the requirement.

• Purpose: Delaware permits a general purpose clause under 8 Del. C. § 102(a)(3), covering any lawful act or activity. A narrow purpose clause limits what the company can do later and gives a future counterparty something to argue about, so keep it general unless a regulator requires otherwise.

• Authorized shares and par value: the number of shares the corporation may issue and the nominal value of each. Both drive Delaware’s filing fee and its annual franchise tax, so treat them as economic terms rather than boilerplate.

• Incorporator: the person who signs and files the charter. The incorporator’s role ends once the initial board is in place, either by appointment or by being named in the charter itself.

• Effective date: the filing takes effect when the state accepts it, unless you specify a later time. Delaware allows a delayed effective date of up to 90 days after filing under 8 Del. C. § 103(d).

• Optional protections: a Delaware charter may exculpate directors from monetary liability for breaches of the duty of care under 8 Del. C. § 102(b)(7), and since the 2022 amendment that provision can also cover certain senior officers for direct claims. Independent directors may be reluctant to serve without it.

Requirements vary by state, so check the filing office’s own instructions before you file rather than working from a template you found online.

What are the steps to file Articles of Incorporation in the US?

Pick the state

‍Incorporate where your investors expect you to, and qualify separately in the states where you actually operate. Delaware reports more than 2.28 million entities and over two-thirds of the Fortune 500 as of its 2025 annual report, which is why investor documents and their counsel assume the Delaware General Corporation Law. If you are bootstrapping and operating in one state, incorporating at home avoids a second set of fees and a second registered agent, but if you will operate in more than one state and/or take third-party investment, Delaware is probably your best option.

Separate the entity choice from the tax election

Forming a corporation is a state filing. “C corporation” versus “S corporation” is a federal tax election made on IRS Form 2553, and it does not belong in the charter. We have more on the difference here.

Clear the name

Search the state’s entity database for an existing name, then check the federal trademark register for conflicts in your class. Reserve the name if your filing is more than a few days away.

Set the share structure with the franchise tax in mind

A common startup structure is 10,000,000 authorized shares at a par value of $0.0001. The share count leaves room for founders, an option pool and a first round, and the low par value keeps the Delaware numbers manageable. (You’ll want to avoid “no par” stock, though.)

File the charter

Delaware’s minimum filing fee is $109 under the fee schedule revised August 1, 2026, plus $9 for each page after the first. Expedited service runs $50 for 24-hour and $100 for same-day processing. Using an agent for filing brings a separate service fee, but that’s a worthwhile expense, in our view, as the service agents can receive documents much more quickly.

Get an EIN

Apply directly with the IRS on Form SS-4 (electronic filing is required except in narrow circumstances). The number is free, it arrives immediately when you apply online, and you need it before you can open a bank account or run payroll.

Adopt the organizational consent

The incorporator appoints the initial board, and the board then adopts bylaws, appoints officers, approves the registered agent and authorizes the issue of founder stock. Keep the signed consents, because investors will ask for them in diligence.

Issue founder stock and file the 83(b) elections

If founder shares are subject to vesting, each founder must file an 83(b) election with the IRS within 30 days of issuance. The deadline is statutory, and there is no relief for missing it.

Qualify in the states where you do business

A Delaware charter does not authorize you to “do business” in California, New York or anywhere else. Foreign qualification generally means a filing, a local registered agent and annual fees in each state where you have people or property.

Obtain the permits and licenses you need

These depend on your industry and your physical locations, not on your state of incorporation. Check city and county requirements as well as state ones.

What are the benefits of incorporating a startup?

Limited liability, within limits

A corporation is a separate legal person, so business debts and claims generally reach the company rather than its owners. The protection is not absolute. Personal guarantees on leases and credit lines still bind you, unpaid payroll taxes can be assessed against responsible individuals under IRC § 6672, and a court can disregard the entity where it was left undercapitalized or run as an alter ego of its owners. Separate bank accounts and real corporate records are what keep the protection intact.

Stock you can actually issue

Options, restricted stock, safes and preferred rounds all depend on having authorized shares to issue. An LLC can replicate some of this with profits interests, but the documents are bespoke and investors read them slowly. A corporation gives you instruments that everyone in the market already understands.

The Section 1202 question

C corporation stock may qualify as qualified small business stock under IRC § 1202, and the 2025 changes made the provision more useful for founders. For stock acquired after July 4, 2025, the exclusion is tiered: 50% of gain after a three-year hold, 75% after four years and 100% after five. The per-issuer cap rose from $10 million to $15 million, and the issuer’s aggregate gross assets ceiling rose from $50 million to $75 million. The qualifying conditions are detailed, some states including California do not conform, and the analysis belongs with your tax adviser rather than in a blog post.

Ownership that transfers cleanly

Stock transfers by assignment, subject to the charter, the bylaws and any stockholder agreement. A buyer or an investor can read a stock ledger and a cap table in an afternoon. Reconstructing ownership from a chain of amended operating agreements takes longer and finds more problems.

Incorporation is not, by itself, a tax saving. A C corporation pays federal tax at 21% on its profits and shareholders pay again on dividends. The tax case for a C corporation usually rests on Section 1202 and on retaining earnings to fund growth, not on a lower headline rate.

What are common mistakes to avoid when filing Articles of Incorporation?

• Setting the share structure without running the franchise tax math. Delaware defaults to the Authorized Shares Method, which charges $250 for the first 10,000 shares and $85 for each additional 10,000. A company with 10,000,000 authorized shares sees roughly $85,165 on the default notice. Recalculating under the Assumed Par Value Capital Method, which uses issued shares and gross assets, brings many early-stage companies down to the $400 minimum plus the $50 annual report fee. Both methods are set out on the Delaware Division of Corporations’ franchise tax page.

• Authorizing no-par stock. Delaware values no-par shares at $100 each for the Assumed Par Value Capital Method, which removes the cheaper of the two calculations. A nominal par value such as $0.0001 keeps both the filing fee and the annual tax low.

• Authorizing too few shares. A thin share count leaves no room for an option pool and forces a charter amendment, with stockholder consent, at the moment you can least afford the delay.

• Writing a narrow purpose clause. Founders sometimes describe their current product in the charter. The product often changes within a year, and the clause stays on the public record. Keep the purpose general.

• Missing the 83(b) window. Thirty days from issuance, with no extension available. This is among the most expensive filing errors a founder can make, and it takes ten minutes to avoid.

• Filing it yourself when the cap table is not simple. One founder, no vesting and no outside money: a formation service may be all you need. Two or more founders, vesting, advisors, or a safe expected in the next six months: get counsel involved before you file, not after.

What are the legal implications of not having Articles of Incorporation?

Without a filing you are a sole proprietorship, or a general partnership if you have a partner. In a general partnership each partner can bind the business and each is personally liable for its debts, including debts the other partner ran up. That exposure, rather than any question of credibility, is the real cost of not filing.

You also have no stock, so you cannot grant options, sign a safe or take a priced round. Banks, landlords and enterprise customers ask for a certificate of good standing you cannot produce. And the Section 1202 clock has not started, because there is no qualifying stock to hold.

Contracts you sign in your own name are still enforceable. You are simply the one on the hook for them.

Do you need a lawyer to file Articles of Incorporation?

You do not need a lawyer to file, because the form is short and the state will accept it from anyone. Whether you should use one depends on how many people own the company, whether any of them are vesting, and whether you expect outside money within the year. If the answer to the last two is yes, the cost of counsel is small next to the cost of fixing a charter and a cap table during a financing.

The filing is cheap. The defaults you set in it are not, once other people own stock.

If you are incorporating in the US and want the share structure, the vesting and the 83(b) elections handled together, get in touch with our team.

This article is general information and not legal advice for any specific situation.