If you’re starting a business as a corporation, having solid internal and external governing documents is key to protecting it against monetary, legal and functional issues that may arise.
This means planning, as well as a lot of paperwork.Two formal documents you’ll need to create as you journey into business ownership are articles of incorporation, which establish your company as a legitimate entity, and bylaws, which govern how it operates.
Articles of Incorporation
Articles of incorporation are public documents that must be filed with the Florida Division of Corporations to establish your corporation as a legitimate entity. Only after these documents are filed can you apply for a tax ID, obtain business permits and sign contracts to conduct business.
Your articles of incorporation will typically include the business name, address, purpose, registered agent, names and addresses of the incorporators, and stock information. Depending on the type of corporation you’re creating, you may be required to provide more specific information about your business’s purpose to validate it as a legitimate entity.
To ensure that this information is always kept up-to-date, you’ll be required to file an Annual Report as well.
Bylaws are much more detailed and govern how your business will operate. They document the powers and responsibilities of your principals, frequency of shareholders’ meetings, and process of removal of directors and officers. Bylaws are formally adopted by all named parties in the articles of incorporation, and can only be amended in accordance with a previously established amendment process.
Businesses create bylaws to bring clarity to the functions of the organization. In cases of conflict over governance, they can be referred in a court of law to clarify both practices and procedures. When drafted properly, bylaws can significantly impact the way a business operates, both internally and externally.
Key Differences Between Articles of Incorporation and Bylaws
- Articles of Incorporation are public records. Bylaws are not.
- Filing articles of incorporation is mandatory. There’s no formal requirement that bylaws be filed.
- To amend your articles of incorporation, you must comply with the requirements of the law. Amending your bylaws is a much more simplistic process.
- Though bylaws govern the day-to-day functioning of the company, in cases of a conflict between your articles of incorporation and your bylaws, your articles of incorporation always trump your bylaws.
Contact an Experienced Florida Business Law Attorney for Assistance
If your corporation were a building, the articles of incorporation and bylaws would be the foundational groundwork of the structure. Though they serve different purposes, they are extremely important to establishing your organization’s purpose and guiding it to success.
If you need articles of incorporation and bylaws drafted and filed for your corporation, contact Florida business law attorney Todd M. Kurland at (561) 693-4514. We have years of experience working with local business owners, and look forward to helping you establish yours.