Organizational Documents For LLC: Everything You Need to Know
Organizational documents for LLC primarily include an articles of organization that creates your LLC. 3 min read
Organizational Documents for LLC
Organizational documents for LLC primarily include an articles of organization that creates your LLC. An LLC is a legal entity created within the state you reside in and mixes aspects of a partnership and corporation.
In the same manner as a corporation, LLC owners cannot be held liable for debts incurred by the business. Like a partnership or sole proprietorship, LLCs are flexible, offering pass-through taxation. Pass-through taxation means that losses and profits pass from the business to individual members. Members would then file such profits and losses on your individual tax returns.
Moreover, you do not need help from an attorney to create an LLC, and you may file the necessary legal documents on your own. On the other hand, you can use a professional formation service to create an LLC on your behalf. When creating an LLC, you must file an articles of organization within the state you live in. Your articles of organization functions as a document and outlines essential information about your LLC. After the form has been registered, the LLC is officially a registered entity in your state.
An articles of organization is usually filed at the secretary of state office in your state. In certain states, however, you may have to file with another state agency. The following states require you to file with another agency:
- New Jersey
Articles of Organization Information
Moreover, other states may call an articles of organization a certificate of organization or a certificate of formation. The precise filing mandates vary by state, but you need to include the following information in all cases:
- Business Name: To avoid a name rejection, conduct a thorough search in the state database to see if your intended name is already registered. You can do so via the secretary of state website in a state. Ensure that your name is not the same as other names. For instance, if your business is called “Pasta Corporation” while the same name applies to another business, the officials will reject your name. Also, the name should contain certain designators, such as “L.L.C.” or “LLC.” Also, some words come with restrictions: “bank,” “insurance” and “trust.”
- Statement Purpose: You must note the nature of the business you intend to create. Many states do not mandate a purpose statement. Instead, a simple statement that mentions that the LLC engages in lawful business activity will suffice. An open general statement also opens the door for potential business opportunities. If you intend to create a professional limited liability company (PLLC), you would need a certain licenses based on your profession.
- LLC Duration: If the LLC will not exist forever, you must state a time when the LLC would be dissolved. With that, most LLCs exist in perpetuity. Also, states generally may not require a specific end date.
- Primary Business Address: You must list the primary headquarters for the LLC. This means the address in which the business will primarily operate. If you own a home business, you may label your home as your main business center. To get home office deductions, a portion of the home should be used solely for that business or trade. Further, you should have no additional locations where you operate your business.
- Registered Agent: You must have a registered agent listed on your document. A registered agent is an appointed person who accepts legal paperwork on your LLC’s behalf. Such documents may include court paperwork or documents from state authorities. You must have a registered agent in every state where your LLC operates. Registered agents may be a member or a person outside of the business approved by the state. You can also choose a company or lawyer to be your registered agent. To qualify as a registered agent, the agent must have a physical street address in the state where your business functions.
- Management: Most states compel you to state if your LLC is manager or member-managed. Many LLCs operate as a member-managed organization, which means that members take an active role in managing the LLC. In manager-managed LLCs, members appoint managers to run the business.
Operating agreements are generally not mandatory in most states, but you should draft one to ensure that you manage the LLC properly. An operating agreement should contain the following pieces of information:
- Roles and duties of each member
- Compensation plans
- Rules and guidelines
You may tailor an operating agreement how you see fit, and you do not have to register the agreement with state officials.
If you have more questions on organizational documents for LLC, submit your legal inquiry to our UpCounsel marketplace. UpCounsel’s attorneys will give you greater insight into successfully registering your LLC in the state where you reside, and they will give you more information on registered agents. Also, they will discuss the benefits and drawbacks of an LLC structure for your business.