Charter

You can charter a boat or a plane, but an official charter refers to starting a new town, an organization such as the United Nations, a university or a company. It's the founding document. It gives an organization certain rights, spelling out its governing structure and its basic laws.

Perhaps a sole proprietorship or partnership now wants to incorporate. They would file a charter (also called articles of incorporation) with the secretary of state. It would include information like where the business will be headquartered, and would spell out the official name and address, its business purpose, whether they are for profit or non-profit, some basic financial data, the ownership structure and who is on the board of directors.

Once the application is approved, the owners will not have personal liability for incurring debts or any damages, but the corporation will. (That alone might be worth all the paperwork.)

A non-profit organization might want to write up a charter in order to gain more credibility and to obtain tax exempt status as a 501(c)(3) organization. Their purpose must be limited to such things as charitable, religious, public safety or scientific causes and would also limit liability for the organization’s directors. The organization won‘t have to pay sales taxes, property taxes, or any kind of business taxes.