Key Takeaways:

  • A Certificate of Organization is essential for legally forming an LLC and provides liability protection to its members.
  • Common mistakes in filing include incorrect naming, missing information, and improper designation of a registered agent.
  • After filing, crucial next steps include obtaining an EIN, drafting an Operating Agreement, and registering for taxes and licenses.

A Certificate of Organization LLC is a form that's filed with the secretary of state in order to form a limited liability company, or LLC. This document can also be called a Certificate of Formation. This certificate gets mailed to the appropriate secretary of state's office, and a check is included for the correct filing fee. Each state's business division or secretary of state will have details on how to fill out the registration form.

For example, in the state of Delaware, the Certificate of Formation is what's received from the state once the LLC gets filed and approved by the Secretary of State of Delaware. This is similar to a birth certificate for the newly-formed LLC. The original and approved Certificate of Formation will get emailed to the LLC. 

The document has a date stamp and time stamp in the corner of the black and white form indicating it has been approved by the Secretary of State. The only document that needs to be filed to form an LLC in the state of Delaware is the Certificate of Formation.

How Do I Submit an Application for a Certificate of Organization?

Most states give a PDF form that businesses can fill out to form the Certificate of Organization. After filling it out, the next step is to pay the filing fee with the company's credit card information. There are several states that require you to make your own form, such as the state of Iowa.

Understanding the Importance of a Certificate of Organization

A Certificate of Organization, also known as Articles of Organization in some states, is a vital legal document required to officially form a Limited Liability Company (LLC). This document serves multiple purposes depending on the state where the LLC is being formed. At its core, the Certificate of Organization provides the state with essential details about the new business entity, such as its name, address, the names of its members or managers, and the registered agent.

The significance of this certificate extends beyond mere registration. It also plays a critical role in establishing the LLC's credibility with customers, suppliers, and financial institutions. Additionally, obtaining a Certificate of Organization is a legal requirement in all states for LLCs to conduct business legally and benefit from the liability protection that an LLC offers to its members. This document is essentially the LLC's birth certificate, marking its official recognition by the state.

What Is Included in a Certificate of Organization?

The information that's required for the Certificate of Formation will vary from state to state. The majority of states make it mandatory to include "LLC" or another word that's similar in the business name. The following information should be included in all Certificates of Organization: 

  • Date the LLC became effective.
  • Registered agent's name and address.
  • Address of the company's registered or main office.
  • Information regarding who manages the LLC (members or managers).

The form may ask for at least one member's name and address, if not for all of the managers. Each organizer may need to state their name and address as well. If there isn't a different category for professional LLCs, the company may be required to assign the business as a professional LLC. The organizational designation and company name also need to be provided.

In the state of Delaware, the Delaware LLC Certificate of Formation stays on file with the state's Secretary of State. Only three items need be included, which are the name of the LLC, the address of the LLC's main or registered office, and the Delaware registered agent's name and address.

Additional information can be provided on the form if desired. There are advantages and disadvantages to giving more information than is asked. Some companies want all the members' names, titles, and physical address on the Certificate. This makes them feel safer knowing their name is on file as an LLC member in case any arguments happen in the future about ownership. 

However, a disadvantage is an amendment needs to be filed in order for any changes to be made. The state charges a high fee to make any changes, which many companies will find unappealing. For this reason, most people decide not to put extra information on the Certificate of Formation.

Common Mistakes to Avoid When Filing a Certificate of Organization

When filing a Certificate of Organization, business owners often make several common mistakes that can delay the approval process or result in legal complications down the line. Some of these mistakes include:

  • Incorrect LLC Name: Each state has specific naming rules, such as prohibiting names that imply the company is a different type of entity (e.g., "Corp" or "Incorporated"). It's crucial to ensure the LLC name complies with the state’s regulations and is not already in use.
  • Omitting Required Information: States require specific information on the Certificate of Organization, such as the LLC's principal office address, registered agent, and management structure. Failing to include this information can lead to rejection.
  • Improperly Designating the Registered Agent: The registered agent must be a resident of the state or a business entity authorized to do business in that state. Missteps in appointing a registered agent can result in missed legal documents, which could be detrimental to the LLC.
  • Inconsistent Information Across Documents: The information provided in the Certificate of Organization must match other legal documents related to the LLC, such as the Operating Agreement and any applications for federal EIN.

Business owners can avoid these errors by carefully reviewing the filing requirements for their state or consulting with a legal professional. UpCounsel offers a platform to connect with experienced attorneys who can assist with the filing process to ensure compliance and accuracy.

What States Require a Certificate of Organization?

New Jersey requires LLCs and the majority of other businesses to have a Certificate of Formation. A Certificate of Formation is required for LLCs in Texas as well. Delaware requires a cover letter to go with any Certificates of Formation that are filed for LLCs. While the state of Iowa requires LLCs to have a Certificate of Organization, there is no application form given. The state of Idaho also requires a Certificate of Organization.

Do I Need an Attorney to Apply for a Certificate of Organization?

It's easy enough for companies to file a Certificate of Organization on their own. However, it gets complex if there's more than one member in the LLC. Hiring an attorney will make sure the filing is done properly.

What Happens After Filing a Certificate of Organization?

After successfully filing the Certificate of Organization, the state will review the document to ensure it meets all legal requirements. Once approved, the LLC officially becomes a legal entity. The next steps typically involve:

  1. Receiving Confirmation from the State: The state will issue an official acknowledgment of the LLC's formation, often providing a stamped copy of the Certificate of Organization. This document should be kept in the LLC’s records.
  2. Obtaining an Employer Identification Number (EIN): The IRS requires all LLCs to obtain an EIN, which is necessary for tax purposes, hiring employees, and opening a business bank account.
  3. Drafting an Operating Agreement: While not always required by law, an Operating Agreement is a critical document that outlines the LLC's management structure, member roles, and operating procedures.
  4. Registering for State Taxes and Licenses: Depending on the state and the nature of the business, the LLC may need to register for state-specific taxes and obtain necessary business licenses or permits.
  5. Opening a Business Bank Account: With the EIN and the Certificate of Organization, the LLC can open a business bank account, which is essential for maintaining financial separation between the owners and the business.

These steps are crucial in setting up the LLC to operate legally and effectively. Ensuring each step is properly completed helps prevent future legal or financial issues.

If you need help filing a Certification of Organization for your LLC, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.