Have you decided to operate your business as a Limited Liability Company (LLC)? If you answered yes, you must comply with your state’s requirements for registering your company. Those responsibilities include filing an articles of organization (sometimes called a certificate of organization or certificate of formation) with the state government.
The articles of organization is a legal document containing important information about the business. The Secretary of State office must approve the document for the LLC to be recognized as a legal entity.
Why Articles of Organization are Important for an LLC
Filing articles of organization officially registers the company as an LLC with the state and establishes it as a separate legal entity from its owners (which are called members). That legal separation between owners personally and their business is one of the main drivers for entrepreneurs to form an LLC. In most instances, members are not held liable personally for the company’s legal and financial problems. That gives business owners some peace of mind that their personal assets (e.g., home, vehicles, retirement funds, etc.) will not be at risk if the LLC is sued or cannot pay its debts.
After receiving state approval of its articles of organization, an LLC is considered “domiciled” in that state (i.e., the state becomes the company’s “home” state). The business goes on record as a domestic LLC in the state, obligated to operate according to that state’s laws and codes.
Often, entrepreneurs choose to form their LLC in the state where they are located physically. However, some select a different state if they believe the business regulations and tax rules for LLCs are more favorable there. There are many variables to consider, so I recommend talking with an attorney and accountant (or tax advisor) for professional expertise when deciding what state to call “home.”
Besides the articles of organization, states may require an LLC to complete other formalities, too. For example, they may request that the LLC file an initial report (and annual reports, thereafter) and keep an operating agreement at the principal place of business.
Registered limited liability companies that want to operate in states beyond their home state must go through a foreign qualification process in those states.
Each state has its articles of organization (or certificate of organization) form available online via the appropriate state agency website. What details (articles) must be entered into articles of organization for an LLC? They vary from state-to-state, but generally, they include:
- Name of the LLC
- Statement of Purpose – Many states do not require the purpose to be very specific, which leaves the opportunity for business owners to provide a general description that allows them to pursue varied opportunities.
- Physical address of the company’s principal place of business
- Mailing address
- Whether its members or managers will manage the LLC
- Name and address of the LLC’s registered agent
- Names of the LLC’s organizers (and managers if member-managed)
- Effective date requested – Some states allow for a future effective date.
- Duration of the LLC – By default, most states will consider an LLC to be perpetual (continuing indefinitely until formally dissolved) unless otherwise stated in its articles of organization.
- Organizer’s signature
How to File Your Articles of Organization
LLC organizers must file their articles of organization with the appropriate state agency. Most states’ websites provide the forms online along with filing instructions. Filing online is usually the fastest way to have the paperwork processed and approved.
The state fee for filing articles of organization varies from state to state. On average, the cost is approximately $130, but the fee could be a good deal less or more depending on where the LLC is formed. I recommend visiting your state’s Secretary of State (or comparable agency’s) website to research the costs and other details so that you know what to expect.
Options for Preparing and Submitting the Form
- Lawyer – Attorneys have the expertise to provide essential insight into the legal pros and cons of business entity types. Also, they can help prepare and file business documents, including articles of organization. Note that business owners do not have to use a lawyer to complete and submit their LLC formation paperwork. When adding attorney’s fees to the state’s filing fees, a business owner may find it cost-prohibitive for their startup budget.
- Do It Yourself – Entrepreneurs may consider going “DIY” and prepare and file their own articles of organization. This might seem like the most cost-friendly route. However, realize that state filing fees are nonrefundable. If an organizer makes any errors in the document, the state will likely reject the registration. That means the LLC paperwork will need to be corrected and filed again, incurring another filing fee.
- CorpNet – An online document filing company, like CorpNet, offers filing expertise and assistance to ensure an LLCs’ articles of organization get handled accurately and promptly. We have expertise in filing formation and incorporation documents in all 50 states. And we provide exceptional value; you will likely find our fees more affordable than those charged by many attorneys.
When to File the Documentation
An LLC will need its articles of organization approved before it may check off other startup to-dos from its list and operate legally. For example, it will need to have articles of organization to obtain a Federal Tax ID Number or Employer Identification Number (EIN), open a business bank account, and apply for any required business licenses and permits. The best time to file depends on entrepreneurs’ goals and preferences. As a general guideline, it can be most beneficial to prepare and file the paperwork after the business owners have:
- Decided to operate their business as a limited liability company;
- Conducted a business name search to make sure that the name they want to use is available in the state (and a trademark search in case they might expand to other states or their products and services are sold over state lines and they want to avoid confusion and potential legal issues);
- Designated a registered agent to accept service of process.
Is there a preferred time of year for starting an LLC?
Business owners can submit their articles of organization at any time. However, some circumstances may make a specific month or date more desirable than others. For example, suppose the organizers want to start the LLC on April 10th. In that case, they’ll want to find out how long the state’s approval turnaround interval is and submit their documentation in time to allow for the processing. If the business owners have formed their company as a different entity type and want to switch it to an LLC, they might consider requesting an effective date of January 1 of the new year. This creates a clean split between operating as one entity type in the current year to operating as a limited liability in the next year. Not only does that sound neat and tidy, but it also eliminates the need to file two sets of tax forms, which occurs when a business changes its entity type at any point mid-year.
How to Make Changes and Amendments
LLC members may amend their business’s articles of organization by filing an articles of amendment form (sometimes called “certificate of amendment” or “certificate of change.” The articles of amendment and the original articles of organization become part of the LLC’s public record. Some states have a form called “restated articles of organization” that replace the original articles of organization when the LLC amends them.
Count on CorpNet’s LLC Filing Experts to Help You
Filing articles of organizations is a critical step toward starting an LLC. Before deciding on the LLC structure or another type of business entity, business owners should research state requirements and seek professional legal, tax, and accounting advice. Making an informed decision can help entrepreneurs get on a successful path from the start.
After you’ve looked into and have decided upon what will serve you and your business goals best, contact my team at CorpNet. We’re here to help you save you time and money on the required filings when launching a business—including your articles of organization and much more!