There are quite a few steps you must go through to properly form and legally establish an LLC. However, creating and filing your Articles of Organization should be top priority.
The Articles of Organization is a legal document that must be approved by the state for you to legally create a new entity. Each state refers to this document differently, so it’s important to know how your state references Articles of Organization. Each state also requires different information for filing paperwork.
Regardless of state rules and labeling, the purpose is all the same. The Articles of Organization outlines the details of your LLC and shows that your business is officially and legally formed. It also helps establish your LLC as a separate legal entity from its members.
What is the Purpose of the Articles of Organization
The purpose of Articles of Organization is to legally separate the business from its members.
All LLCs are required to have an approved Articles of Organization before legally operating as a business. For instance, an approved Articles of Organization must be obtained before getting an Employer Identification Number (EIN). You also cannot open a business bank account, apply for credit cards, or apply for any business permits or licenses without an approved document.
Information that needs to be included in Articles of Organization
The information required for the Articles of Organization varies based on the state. For specific information required for your state, visit the state agency website. However, you’ll typically have to include:
Company Name – You must have a unique business name to create an LLC, meaning it cannot be registered by another business in the same state. Additionally, the name must end in some form of Limited Liability Company - “LLC,” “L.L.C,” or “Limited Liability Company.”
Statement of Purpose – Articles of Organization must include the overall purpose of your LLC. This allows business opportunities for future endeavors.
Duration – LLCs have the flexibility to have perpetual duration or formed with a specific end date in mind. Regardless, the duration and intention should be written in the document.
Place of business – Listing the address or main location of your business is necessary. If you have a storefront, list the physical address. If you own an online business or work from home, you can select your home as the main address.
Registered Agent – A registered agent is required by all states when forming an LLC. Articles of Organization also requires you list your registered agent's name and address. The registered agent can be you, another member, an attorney, or an outside individual.
Management – LLCs can be member-managed or manager-managed. Most LLCs are member-managed because all members share responsibility for running the business.
This information listed above are just a few details most Articles of Organization require before filing with the state.
What is the difference between articles of organization and articles of incorporation?
When you make the decision to take your business to the next level, you choose a business structure for growth. Common structures are LLCs and corporations. Each entity is required to file a document that legally forms the business. For LLCs, this is known as the Articles or Organization. For corporations, this is known as the Articles of Incorporation.
Articles of Organization
It’s required by law that LLCs provide information to the state such as the company name, address, registered agents name and address, and the duration of formation. Depending on the state and industry, additional information such as contact information for members and the purpose of the company may also be required.
Articles of Incorporation
Articles of Incorporation also require the corporation's name, number of shares it’s authorized to issue, the address and name of its initial registered agent, and the name and address of the shareholders incorporating. The purpose of the business and whether or not it’s intended for profit is also often required by states.
Simply put, Articles of Incorporation require more detailed information specific to corporations. Since corporations are more complex, you can expect Articles of Incorporation to be more difficult as well.
How to File Articles of Organization
Articles of Organization are associated with a fee, and that fee varies by state and how you file the forms.
For example, if you want to file by paper, there may be a service charge whereas online would be free. Typically, the fee to file Articles of Organization is around $100.
Here are the steps you need to follow when you’re ready to file your articles of organization:
Find Correct Online Forms
You can find the Articles of Organization on the state’s agency website. Create an account, locate the correct forms, and file online. Or you can opt to download them and mail them back to the address listed.
Add Information into the Articles of Organization
There are four main articles that you need information for to complete the filing process:
- Entity Name and Type
- Registered Agent Name and Address
- Governing Authority Type
- Business Purpose
File the Articles of organization
You can file the Articles of Organization by completing forms online or submitting them in person or by mail. Once you’ve filed the document and gotten approved, you can complete other business duties like:
- Create an Operating Agreement
- Get an EIN
- Open a Business Bank Account
- Get Licenses and Permits
Reasons Articles of Organization may be rejected
You can create and submit your Articles of Organization, but there’s no guarantee that the state will approve it. Why would your LLC Articles of Organization get rejected?
- Fees were not included
- Information is illegible or incomplete
- Legal formalities not met
- The proposed name of the LLC is not unique
- The proposed name of the LLC does not meet state requirements
How a Lawyer Can Help Submit Articles of Organization
When created and filed properly, an LLC protects members from financial burdens and, ultimately, failure.
There are multiple ways to form an LLC with no lawyer involved. However, it’s best to consult a business lawyer to ensure your businesses’ legal structure is properly established.
Each state’s requirements vary when it comes to forming an LLC and the information required for the Articles of Organization. Are you familiar with the rules and regulations or your state? Do you want to research the legal details of forming an LLC?
An experienced business attorney can assure that you meet all legal requirements when forming an LLC. They can also help determine whether an LLC is the right entity for you, or if you should consider another structure.
The Articles of Organization contains many small details that can often be overlooked by business owners. It’s these mistakes that result in rejection and sometimes financial burdens. To ensure smooth sailing, work with a business attorney.