- 1What are Articles of Incorporation?
- 2Different Types of Articles of Incorporation
- 2.11. Articles of Incorporation – General Stock (Form ARTS-GS)
- 2.22. Articles of Incorporation – Close (Form ARTS-CL)
- 2.33. Articles of Incorporation – Professional (Form ARTS-PC)
- 2.44. Articles of Incorporation – Nonprofit Mutual Benefit (Form ARTS-MU)
- 2.54. Articles of Incorporation – Nonprofit Public Benefit (Form ARTS-PB-501(c)(3))
- 2.64. Articles of Incorporation – Nonprofit Religious (Form ARTS-RE)
- 2.74. Articles of Incorporation – Common Interest Development (Form ARTS-CID)
- 3Amending Articles of Incorporation
Many businesses in Orange County, California have incorporated because of the various benefits that come along with a corporate business structure. One of the biggest benefits is that Corporations provide protection for their owners’ personal assets if the company incurs debts and obligations that it cannot pay. In order to incorporate a business in California, you need to file Articles of Incorporation with the California Secretary of State.
Learn all about Articles of Incorporation by reading through this article.
What are Articles of Incorporation?
Articles of Incorporation, otherwise known as the Certificate of Incorporation or the Corporate Charter, are a document that a business needs to file with the California Secretary of State in order for it to be legally recognized as a Corporation. The Articles of Incorporation include the name of the Corporation, its basic purpose, the incorporators, and the amount and types of stock that can be issued.
Articles of Incorporation need to be made properly, because the documents will be returned to you without being filed if there are errors, omissions and other irregularities. It is wise to have a corporate attorney in California assist you in preparing and filing the Articles of Incorporation so that they are done properly.
Different Types of Articles of Incorporation
The California Secretary of State provides 7 different forms for Articles of Incorporation. The form you need depends on what kind of Corporation you intend to put up. Consult your corporate lawyer about which type of corporation is most appropriate for your business.
These are different Articles of Incorporation Forms:
1. Articles of Incorporation – General Stock (Form ARTS-GS)
A General Stock Corporation, commonly referred to as C Corporation, is the most popular type of corporation. In this structure, the corporation is a separate legal entity from its shareholders. There can be an unlimited number of shareholders in a General Stock Corporation, and each one has the right to issue stock. This type of Corporation can only issue one class of stock. The General Stock Corporation is the entity of choice for those who plan a private offering of stock, transact business globally, acquire other businesses to expand and/or become a publicly traded corporation.
You need Form ARTS-GS to file for a General Stock Corporation. The California Secretary of State can provide you with a form you can fill up, or you can have a corporate lawyer prepare one for you and file it along with 100 USD filing fee and a non-refundable 15 USD service charge.
2. Articles of Incorporation – Close (Form ARTS-CL)
You need to file Form ARTS-CL if you are planning to put up a Close Corporation. A Close Corporation is also called a Family Corporation, an Incorporated Partnership, a Chartered Partnership. It is a business structure owned and operated by a small group of people only. The small group of individuals in this structure serves as shareholders, officers and directors. Each person in the group is involved in the management of the business. The difference of a Close Corporation from the General Stock Corporation is that its stock is neither issued nor traded to the public.
When filing the Form ARTS-CL, you need to pay a 100 USD fee and a non-refundable 15 USD service charge.
3. Articles of Incorporation – Professional (Form ARTS-PC)
You need Form ARTS-PC in order to form a Professional Corporation. A Professional Corporation is a special type of Corporation formed to conduct a profession that requires a license to practice (e.g. nurses, real estate brokers, attorneys, doctors, dentists, certified public accountants and architects). Unlike other types of Corporations, the Professional Corporation does not provide liability protection for any professional negligence and/or malpractice by the licensed professionals.
After completing the ARTS-PC form (or having a business attorney prepare one for you), file it with a 00 USD filing fee and a service charge of 15 USD.
4. Articles of Incorporation – Nonprofit Mutual Benefit (Form ARTS-MU)
A Nonprofit Mutual Benefit Corporation is also known as Membership Corporation. It is a type of Nonprofit Corporation, formed to serve its members and not anyone outside of it. This type of Corporation, therefore, cannot obtain IRS 501(c)(3) nonprofit status as a charitable organization. It has to pay the same taxes as a regular Corporation.
You need to complete and file Form ARTS-MU with the Secretary of State to form a Nonprofit Mutual Benefit Corporation. The filing fee for this Articles of Incorporation costs 30 USD, along with a 15 USD service charge to be paid over-the-counter.
4. Articles of Incorporation – Nonprofit Public Benefit (Form ARTS-PB-501(c)(3))
The difference between a Nonprofit Public Benefit Corporation and a Nonprofit Mutual Benefit Corporation is that it exists primarily or exclusively for charitable purposes. This type of corporation is formed for public benefit, not for the interests of its members. A Nonprofit Public Benefit Corporation is viable to obtain IRS 501(c)(3) nonprofit status, and is exempted from paying California franchise tax or income tax each year.
To form a Nonprofit Public Benefit Corporation, you need to file Form ARTS-PB, along with a 30 USD filing fee and a 15 USD service charge. A separate application is required in order to obtain the tax exempt status.
4. Articles of Incorporation – Nonprofit Religious (Form ARTS-RE)
Like Nonprofit Public Benefit Corporations, Nonprofit Religious Corporations are also exempted from paying California franchise tax or income tax every year. This type of Corporation is a religious organization that has chosen to be incorporated under the law.
File Form ARTS-RE to form a Nonprofit Religious Corporation. A 30 USD fee is required for filing, and a nonrefundable 15 USD is required as service charge. A separate application is required in order to obtain the tax exempt status.
4. Articles of Incorporation – Common Interest Development (Form ARTS-CID)
A Common Interest Development Association is a type of Nonprofit Mutual Benefit Corporation, organized under the Nonprofit Mutual benefit Corporation Law. This type of corporation is formed to manage a common interest development under the Davis-Stirling Common Interest Development Act, which governs housing, condominium, cooperative and planned unit development communities in California.
You need to pay a 30 USD filing fee when filing Form ARTS-CID. A 15 USD service charge is also required over-the-counter.
Amending Articles of Incorporation
Articles of Incorporation must be prepared carefully, and filed properly, so that you won’t need to go through the tedious and costly process of amending them in the future. If you do need to amend your Articles of Incorporation, you must file a Certificate of Amendment of Articles of Incorporation form with the California Secretary of State. Before deciding to amend the Articles of Incorporation, you need to consult with your corporate lawyer. Not only can corporate lawyers help you draft your amendment, they can also walk you through the process of amending your documents.