Completing and filing the Articles of Organization is a required step when registering a Limited Liability Company (LLC). This article will cover the following topics about the Articles of Organization for an LLC.
- The importance of having the Articles of Organization
- What should be done BEFORE filing your Articles of Organization
- How to file the Articles of Organization
- What should be included in the Articles of Organization form
The Purpose of Articles of Organization for an LLC
Articles of Organization (sometimes also called Certificates of Organization or Certificates of Formation) are legal documents that outline key details of your LLC.
These documents contain basic company information such as the LLC’s name, members, business address, and registered agent, depending on the rules and regulations of the state where the LLC is formed.
The main purpose of the Articles of Organization is to:
- Officially confirm the LLC’s existence as a legal business entity, once filed and approved by the Secretary of State
- State the responsibilities, duties, rights, powers, and liabilities of each LLC member, and also define the relationship between the LLC and its members
Once your LLC gets approval to operate, it is bound by the laws of the state where it’s founded.
Why You Need Articles of Organization
Articles of Organization are necessary to legalize your business and prevent any potential disputes between members regarding their rights, duties, and protection of personal assets.
Apart from this, many states require Articles of Organization to acquire an Employer Identification Number (EIN), set up a business bank account, and apply for a business loan. Each of these business operations is covered in more detail below.
Employer Identification Number (EIN)
An EIN is a nine-digit taxpayer identification number assigned by the IRS and is required for obtaining a business bank account, a business license, and filing a tax return. Getting an EIN for an LLC is free of charge. You can follow our guide here.
Setting Up a Business Bank Account
Your LLC is a separate legal entity and requires a business bank account independent of your personal finances.
A separate business account plays an important role in a healthy business by protecting your personal assets and finances while growing the business. Moreover, it makes calculating taxes and keeping track of business expenses easier. It simplifies tax reporting and enables depositing tax payments under your company name.
Here is the complete list of documents and elements you’ll need to provide to open a business bank account:
- Employer Identification Number (EIN) - Make sure you’ve received your EIN from the IRS before heading to the bank. You’ll need to show them a copy of your EIN in order to open your account because an LLC is a legal entity subject to federal taxation, all banks and credit unions require an EIN number in order to open an account.
- Articles of Organization - Every bank/credit union will require state-approved Articles of Organization. The Articles of Organization must be approved by the state before applying for a bank account, as this is the way the bank/credit union knows the LLC is authorized to do business in your state.
- Operating Agreement - Describes the ownership structure, member responsibilities, and operating procedures of an LLC, as well as who may manage the LLC and create bank accounts in its name.
- Physical Business Address - This can be your home address or business address. Note your physical business address cannot be a PO Box, private mailbox, registered agent, or virtual office address.
Applying for Business Loans
If you apply for a business loan, the lender will want to look into your company’s structure and details. If your company is registered as an LLC, you need to provide your Articles of Organization and Operating Agreement for consideration.
What To Do Before Filing Your Articles of Organization
Before you submit your Articles of Organization, you need to decide upon the LLC name and appoint a registered agent.
Choose Your LLC Name
When picking out a name for your LLC, there are certain requirements you must meet in order for the name to be acceptable and valid.
- The name has to indicate that the company is an LLC by including “LLC,” “L.L.C.”, ''Limited Liability Company,” or “Ltd.” at the end.
- The name cannot include obscenities, promotion of unlawful activities, anything that suggests involvement with government entities, words such as “bank,” or “insurance,” or anything else reserved for certain regulated industries.
For more specifics on naming requirements and rules, you can go to the state website.
Assign a Registered Agent
If you own an LLC, you’re required to designate an in-state registered agent when you form your company and in each additional state in which you are doing business.
While states vary in their exact requirements for registered agents, there are three rules that often apply:
- The registered agent must be a resident individual or a domestic or qualified out-of-state corporation.
- The registered agent’s office address must be a physical address in the state. This means that a PO Box does not qualify as an in-state address.
- The registered agent must be available during “normal” business hours Monday through Friday.
Your registered agent is your official contact with the state. The state requires a registered agent be designated so that it has an official contact on file for your business. The state will send your company important compliance information and legal correspondence through your registered agent.
Failing to have a registered agent may result in serious, adverse consequences. Your business can be dissolved in the state of its formation and affect the “good standing” of your business.
How to File Articles of Organization
In order to file Articles of Organization for your LLC and register it as a legal entity, you need to do the following.
First, visit your Secretary of State website and learn about the state-specific rules for filing the Articles of Organization.
Find and download the appropriate Articles of Organization form. Most state websites will provide a form or a downloadable PDF copy for you. For example, some states, such as Nevada, give you a standard form, while other states, such as Delaware, will require you to draft your own Articles of Organization and include specific information. Also, be sure to follow the instructions that accompany each form.
You will be asked to supply the following basic information: name for your LLC, business address, management structure, address of organizers, as well as the identity and address of your registered agent. It is important to note that some forms may ask for more information. The forms will contain instructions for where to return them. Some states allow you to file online while others demand a physical copy sent by mail.
Pay the required filing fee for the Articles of Organization, this will range from $50 to $200 depending on the state.
Processing takes about one to two weeks, but can be expedited for an additional fee. After you complete your Articles of Organization form the state will keep the original form you filed, then will mail you a stamped copy indicating it’s been approved, filed, and attached with the paperwork will be a file number.
Elements in an LLC Articles of Organization
The filing requirements vary from state to state, however, certain information must be included regardless of which state you’re in. Here’s the general information you must include when you file Articles of Organization.
Name - Use the registered business name of your LLC and be sure you follow the LLC naming guidelines discussed above.
Principal and Mailing Address - The principal address is your official business address. A street address is typically required or you can use a mailing address as well.
Registered Agent - List your registered agent and registered office. A registered agent accepts legal notifications, such as lawsuits, on behalf of your LLC. Your registered office is the street address in your state where the agent is available during regular business hours.
Statement of Acceptance by Registered Agent - In order to be sure that no one is designated as a registered agent without their knowledge or consent, some states require them to acknowledge their role and responsibilities.
Duration - This refers to how long you plan for the LLC to exist. Most LLCs are registered as “perpetual,” which means that they will operate until further notice or until the LLC dissolves.
Management - Describe the management structure of your LLC. If it is “member-managed”, that means that all members share the managerial workload and run the business together. A “manager-managed” LLC appoints one manager or a group of managers to handle day-to-day operations.
Members - Members are the LLC owners. Not all states require you to list members’ information in the Articles of Organization. If your state requires it, list the names and addresses of the owners of your LLC in this section.
Statement of Purpose - Describe the type of business your LLC plans to conduct. In most cases, you can state a general-purpose, which means it is enough to list “to conduct any and all lawful business” as your statement of purpose. However, some states may require you to list specific business activities for example “car repair, auto shop, and maintenance.”
Liability - Here you will provide a declaration that none of the members, owners, or managers of the LLC are personally liable for its business debts.
Organizer - An organizer is a person who signs and submits the Articles of Organization to the Secretary of State. This can be one of the members, managers, or any person appointed to do the paperwork.
Articles of Organization Resources
For a template, you can fill out a form here. The document is created as you respond to the questions. Once finished, you will receive your Articles of Organization in Word and PDF formats for free. You can modify it and reuse it.
The website LLC University offers a very basic template.
If your LLC is more complex or needs more customization, consider seeking expert advice.
Filing your Articles of Organization is an essential step to forming your new LLC. While the filing fees and information may vary among states, the main purpose of the Articles of Organization is to tell the government basic information about your business.
The importance of the Articles of Organization is to be able to get an EIN, open a business bank account, or obtain a business loan.
One of the most important components of the Articles of Organization is a registered agent. Before filing your Articles of Organization, make sure you find a registered agent since it is a requirement for receiving communication from the state.
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