The Certificate of Incorporation: What It Is and Why It Matters

The Certificate of Incorporation is the foundational legal document that officially creates your startup as a corporation. It defines your legal identity and sets your structure for issuing shares, establishing governance, and attracting investors. Filing this correctly ensures you can raise capital, issue equity, and protect your startup’s legitimacy.

Why it Matters

The Certificate of Incorporation (also called the charter) is filed with the state and legally forms your company. It defines the number and type of shares your company can issue and includes critical terms for governance and future fundraising. It’s a prerequisite for issuing stock, opening bank accounts, and raising capital.

Founders Checklist

Include company name, registered agent, and Delaware address
Authorize number and type of shares (usually 10 million common)
Set par value (commonly $0.00001 or $0.0001 per share)
Include preferred share terms only if you're doing a priced round now
File through Delaware’s online portal
Keep a signed, timestamped copy in your legal files

Founder Fails

Didn’t authorize enough shares, causing delays during fundraising
Set too high a par value, leading to unnecessary tax issues
Filed the charter but forgot bylaws or stock issuances
Left out preferred terms, complicating future investment rounds

When to ask for Help

Before deciding on the number of authorized shares or par value
If you expect to raise a priced round and need to include preferred share terms
When using a template charter but unsure it matches your fundraising goals
If you need to amend the charter after raising money

Frequently Asked Questions

Q: What’s the difference between the charter and bylaws?
A: The charter is filed with the state — it’s public and legally creates your corporation.
The bylaws are internal — they govern how your board and company operate.

Q: How many shares should we authorize?
A: Most startups authorize 10 million shares of common stock at incorporation. It’s a round number that gives flexibility but doesn’t affect valuation directly.

Q: What is par value, and does it matter?
A: Par value is the minimum price at which stock can be issued. It’s usually set very low ($0.00001/share) for tax and accounting purposes.

Q: Should I include preferred stock in the charter?
A: If you’re raising a priced round soon, yes — otherwise, you can amend later when needed.