What Is a Corporate Charter Number?
According to the U.S. law, certain legal entities must file formation documents with a relevant government department. This category includes corporations, general partnerships, limited liability partnerships, limited liability companies and more. The documents required for this purpose are known as the corporate charter or articles of incorporation. Their role is to establish the existence of a corporation in the U.S. and Canada.
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When a legal entity is registered and organized with the secretary of state, it receives a unique number, known as a charter number or corporate number. Once that happens, the company founder or a legal representative can apply for an EIN or FEIN number for tax purposes.
If you're planning to register your business as a corporation, you will need a charter number. This unique identifier is usually assigned by your state's Division of Corporations. After you complete this step, the new legal entity will be treated separately from its shareholders, founders and other individuals involved.
When a legal entity is registered and organized with the secretary of state, it receives a unique number, known as a charter number or corporate number. Once that happens, the company founder or a legal representative can apply for an EIN or FEIN number for tax purposes.
Corporate charter numbers have eight digits and a letter. For example, domestic business corporations registered in Maine, have the letter D, B, RR, I, or CP in their charter numbers. Domestic nonprofit corporations use the letter ND.
EIN numbers, by comparison, have nine digits and no letters. If your business is incorporated in India, you must apply for a Corporate Identification Number, which is the equivalent of a charter number in the U.S.
A corporate charter establishes and confirms the corporation's existence. This document includes essential information about your company, such as its name, structure, duration, number of authorized shares, registered agents and purpose. It also lists the directors of the new entity and their signatures.
Incorporating your business will reduce liability for its shareholders and founders. Basically, it helps protect their personal assets in the event of bankruptcy or expensive lawsuits. Furthermore, it allows you to build your company's credit, regardless of your personal credit score.
In the long run, incorporation makes it easier to create retirement plans and apply for business loans. Depending on the company's location, you might also end up paying less tax. The downside is that you will need to file a lot of paperwork and pay extra fees.
Entity formation fees and charter bill pay policies depend on the state of incorporation and business structure. The costs range between $25 and $200 for nonprofit corporations and $50 to $1,000 for business corporations. For example, incorporating an LLC costs as little as $50 in Colorado and up to $1,000 (expedite service) in Michigan.
After you pay these fees and file the incorporation documents, you will be assigned a charter number. You will use this unique identifier when filing the annual reports as required by law.