The lifecycle of a limited liability company (LLC) begins when you draft articles of organization, a document that sets forth specific details regarding your LLC's management and operation. It's important to make certain that you include all required information in your articles of organization so the document will have legal effect.
What Are the Articles of Organization?
The articles of organization—also known in some states as a certificate of formation or certificate of organization—is a binding legal document created and agreed upon by the LLC members. It provides a blueprint for how the LLC will be governed.
The articles of organization establish the rights, powers, liabilities, duties, and obligations of and among the LLC members.
Are Articles of Organization Filed in All States?
Articles of organization are treated differently depending on your state, and not all states require articles of organization to be filed.
In states that require articles of organization to be filed, an LLC will only be recognized as a legally registered entity once the articles of organization document is filed with, and approved by, the Secretary of State (or similar governmental agency assigned to review and approve such applications) in your state. A modest filing fee is normally required at the time of filing.
In states that do not require articles of organization to be filed as a condition of an LLC being properly registered and legally operational within the filing state, articles of organization still serve an important function. They provide a written framework for the proper organization, management, and operation of your LLC.
What Is Included in Articles of Organization?
The information typically required varies from state to state. However, the forms utilized in the states that require the filing of articles of organization generally include:
- Name of the LLC
- Type of legal structure (i.e., professional liability company, LLC, series LLC)
- Effective date of LLC formation
- Duration for which the LLC will be operational
- Statement of purpose
- Name and address of the registered agent
- Address of the LLC's principal place of business
- Management structure
- Profiles of the members, officers, and managers of the LLC
- Names, titles, and signatures of the organizer(s)
The office of your state's secretary of state should offer boilerplate templates for LLC members to complete and submit. Articles of organization must meet the individual state's requirements for forming and operating an LLC.
What Are the Filing Fees?
In states that require articles of organization to be filed, the filing fee typically ranges from $40 to $500, depending upon the state.
How Are Articles of Organization Different From an Operating Agreement?
While articles of organization set forth an LLC's organizational structure, an operating agreement is a separate document that plays an important role in laying out each member's final stake in the LLC.
The operating agreement is similar to a corporation's bylaws in that it sets forth the financial details regarding the company, including each member's initial financial contribution to the LLC, voting rights afforded to each member, and percentage of interest each member holds.
Once you determine the requirements for forming an LLC in your state, be certain that your articles of organization contain, at a minimum, the information detailed above or you run the risk of having your application rejected—or your LLC structure may be prone to confusion concerning the rights, duties, and obligations of its members.
As with any legal document, it's always advisable to retain an attorney to assist you with preparing articles of organization.