Corporate Charter Definition

What is a corporate charter?

A corporate charter is a company’s birth certificate. An incorporator files a corporate charter with the state to legally create a business. In most states, the corporate charter form asks for the following information: 

• Business name
• Legal entity type
• Registered agent
• Registered address
• Purpose of the business
• Names and signatures of organizers (if an LLC) or incorporators (if a corporation)
• Signed statement by registered agent agreeing to act as the registered agent

If someone forms a corporation, corporate charters need extra information. This includes the number and types of shares issued. The charter usually also asks whether the corporation is a for-profit corporation.

Corporate Charter Benefits

What are corporate charter benefits? Here are some of the primary benefits of charters:

• Limiting liability
• Saving money on taxes
• Giving the owners control over the business’s legal entity type

If business owners didn’t have a corporate charter, then the state may treat their business like a general partnership. Under a general partnership, the business owner may be on the hook for the business’s debts. 

Corporate Charter Considerations

When writing a corporate charter, here are some things for entrepreneurs to keep in mind:

• The name of the business (and whether the name is available)
• The type of business the owner wants to form
• Who the business’s registered agent (For more information, please see the What is a Registered Agent? page) will be 
• Where the business will receive its important legal documents
• The type of ownership structure the business will have
• The products or services that the business will provide

Entrepreneurs who need help with the business formation process don’t have to go it alone. Incorporation services like ZenBusiness can make the process streamlined and straightforward.

Other Names for a Corporate Charter

There are several alternative terms that fall within the corporate charter business definition. Other corporate charter examples include “charter” and “Articles of Incorporation.”

Here are other names for a corporate charter for types of businesses besides corporations:

• Certificate of Limited Partnership (for a limited partnership)
• Articles of Organization for a Limited Cooperative Association (for an LCA)
• Articles of Organization (for a limited liability company)

Depending on where a business is located, the state may use different names to describe the definition of a corporate charter. 

Summary

A corporate charter is like a business’s birth certificate and authorizes the business to legally operate. Things to consider when writing a corporate charter are who the owner wants to act as the registered agent and the legal entity type of the business. The corporate charter’s disadvantages are the upfront cost of filing one. The corporate charter advantages — like potentially paying less in taxes — may outweigh these disadvantages.