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Forming a business as a new entrepreneur takes guts, especially when it comes to organizing and submitting official documents.
Two essential incorporation documents – articles of incorporation and articles of organization – are important to know in and out.
These two documents underlie the foundation of your organization and define your company’s structure and mission, so you’ll want to be informed about them.
This article aims to describe and provide examples of articles of incorporation and organization so that you feel confident filing either of these documents.
Additionally, we’ll discuss the benefits and drawbacks of each document and when you’ll need to submit either one for your business.
By the end, you will become well acquainted with when each is needed during the business formation process.
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Key Takeaways
- Articles of incorporation are a series of documents that are filed with the government at the onset of your business.
- Articles of organization are typically associated with the creation of a limited liability company, or LLC.
- Articles of incorporation are usually filed for C-corporations, while articles of organization are filed for LLCs.
- Both document types have benefits and drawbacks pertaining to the business structure, such as with hierarchy, flexibility, and formation.
Articles of Incorporation
Articles of incorporation are a series of documents that are filed with the government at the onset of your business.
These documents make up your organization’s constitution or code of operations. Articles of incorporation go hand-in-hand with establishing a corporation, such as a C-corporation.
In an articles of incorporation document, you provide identifying information about your business, as well as set your professional intentions.
This information may include your business name, the names of your shareholders, legal clauses, structure, and more.
Articles of Organization
Articles of organization are typically associated with the creation of a limited liability company or LLC.
These documents have similar information to that of articles of incorporation, but it’s specific to LLC requirements.
As with articles of incorporation, those filing articles of organization will need to provide details about their LLC to be shared with a governing body such as the Secretary of State.
Ultimately, in order to establish an LLC, you need to submit articles of organization.
What are the differences between articles of incorporation and articles of organization?
Articles of incorporation are usually filed for corporations, while articles of organization are filed for LLCs.
Both documents are usually a few pages long and include all pertinent identifying information for the business.
Here’s a breakdown of the precise difference between these two documents:
| Articles of Incorporation | Articles of Organization |
|---|---|
| Primarily used to establish a corporation | Primarily used to establish LLCs |
| Corporations involve a more strict structure and have more formalities during the formation process | LLCs are generally easier to form and involve fewer restrictions, as compared to other business structures |
| Corporations are favored by bigger businesses, or businesses needing substantial investment to begin | LLCs are the favorite among small businesses for their simplicity and limited liability |
Benefits & Drawbacks
Both document types have benefits and drawbacks pertaining to the business structure that they originate from, such as with hierarchy and flexibility.
Take a look at the chart below:
Articles of Incorporation
The ability to establish a corporation
Potential tax benefits
Ideal for investors
Ease the burden of decision-making
Complexity in structure or management
Potential double taxation
Articles of Organization
The ability to establish an LLC
Simple formation process
Simple tax structure
Limited liability from debts of the business
Not as credible in the eyes of investors
The size of the organization is limited by the constraints of an LLC
Next Steps
You’ve reached the end of the guide on articles of incorporation and articles of organization.
Nice work! Hopefully, this information has empowered you to begin thinking about your business structure.
Alternatively, if you’ve decided, now you know which document needs to be filed.
Remember, use articles of incorporation for corporations and articles of organization for LLCs.
Both corporations and LLCs have benefits and drawbacks that should be thoroughly considered prior to choosing a structure for your business.
If you are unsure of which to choose, consulting a professional can be a great idea.
Related reading:
Use Swyft Filings to start an LLC, corporation, or other business entity in under 10 minutes.