LLC Membership Certificate How to Fill Out
LLC membership certificate how to fill out? Filling out your membership certificates is one of the most important parts of forming your LLC.3 min read
LLC membership certificate how to fill out? Filling out your membership certificates is one of the most important parts of forming your limited liability company (LLC). While these certificates aren't a legal requirement, they can be a very useful tool, particularly if you're looking for a convenient solution for informing company members of their rights.
Filling Out Membership Certificates
When you're ready to form a limited liability company, you'll need to draft a variety of documents. For instance, to legally form your company, you must file Articles of Organization with your state. You also may want to write an operating agreement, which will define how your business will operate and the ownership percentage of each LLC member.
In addition to these documents, you may want to provide the members of your company with a membership certificate. There are several different reasons that you may want to write membership certificates:
- Your LLC has inactive members.
- LLC members wish to transfer their company interests.
- LLC members cannot easily access company records.
When filling out your certificates, there is a variety of information that you should include:
- The company name and state of incorporation.
- How many members the LLC has.
- The name of the member who will receive the certificate.
It's also crucial that every LLC membership certificate include the specific member's ownership percentage. Certificates should also describe the rights of members as detailed in your operating agreement and formation documents.
Providing your LLC members with membership certificates is not required by law. This means there is no legal requirement for who must sign the certificate. In most cases, an LLC manager will sign the certificate. If you want the certificate to be a little more formal, you can include several signatures:
- A witness's signature.
- A signature from the member receiving the certificate.
- A signature from an LLC agent.
Transfers and Other Considerations
If your company does decide to provide membership certificates, you should make sure that the document describes the member's rights to transfer their ownership interests. Usually, this information will be included in a legend on the front of the certificate, although it can go on the back if there isn't adequate space.
The reason to include such a legend is to make sure that if an ownership interest is transferred, the third party that receives the interest understands that restrictions apply to the transfer. For instance, most legends will state that company shares have been registered under securities laws at the federal or state level. Your legend can also state that sales and transfers are restricted based on the company's operating agreement.
An important thing to understand about membership certificates is that there aren't any laws backing them up. A certificate does not guarantee member rights. Instead, their rights are established when the sign a contract with the company. When issuing membership certificates, you should make sure that your LLC members understand that they aren't the same thing as a stock certificate.
After Formation Requirements
Issuing LLC membership certificates is not a requirement, but there are some things that you are legally required to do after forming your company. Failing to meet these requirements may mean that your LLC may not be legally able to transact business.
For instance, in some states, you may have to submit a Statement of Information after filing your formation documents. The Statement of Information will generally include much of the same information that you listed in your Articles of Organization:
- Your LLC's mailing and business addresses.
- LLC member information.
- An address for your registered agent.
- A description of your company.
Your LLC will also need a federal tax identification number. Also known as an Employer Identification Number (EIN), your business needs a tax ID in order to pay its taxes. The Internal Revenue Service (IRS) issues these numbers free of charge, and if you apply for this number online, it will be immediately issued.
If you want to successfully form your LLC, you may want to get help from an attorney in your state. An LLC lawyer should be familiar with the process of forming an LLC, as well as the tasks that should be completed after you form your company. An LLC checklist can make the process easier if you want to form your company yourself.
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