Future Business Leaders of America (FBLA) Business Law Practice Exam

Which document officially authorizes a corporation to do business in a state?

1. Partnership Agreement

2. Certificate of Incorporation

3. Business License

4. Operating Agreement

The correct answer is: Certificate of Incorporation

The Certificate of Incorporation is the document that officially authorizes a corporation to do business in a state. It is a legal document filed with the appropriate state authorities, such as the Secretary of State, that establishes the existence of the corporation. This certificate typically outlines key information about the corporation, such as its name, purpose, duration, and the number and type of shares of stock that can be issued. Obtaining the Certificate of Incorporation is an essential step in the process of forming a corporation. It ensures that the corporation is recognized as a legal entity separate from its owners and provides it with the legal rights and responsibilities necessary to operate within that state. This document is foundational for a corporation's operations, allowing it to engage in business activities, enter contracts, and be subject to state corporate laws. In contrast, documents like a partnership agreement and an operating agreement pertain to partnerships and limited liability companies, respectively, and are not relevant to corporate formation. A business license, while necessary for conducting specific business activities, does not establish the legal identity of a corporation and is typically obtained after the Certificate of Incorporation has been filed.