Diving into the business world can feel like navigating unknown waters. Along with a sharp business plan, an entrepreneurial spirit and a solid legal foundation are key. One such cornerstone is the Articles of Organization for your LLC.
As financial advisors, we’ve guided hundreds of small business owners through these treacherous legal seas.
The Articles of Organization represent the papers that officially create your LLC. Every state across the US requires this paperwork, laying down the basic structure of your company.
This guide will provide you with an understanding of what Articles of Organization are and why they’re invaluable to your venture. Let’s break down this legal maze together, step by step.
Brief Overview
- Articles of Organization is a legal document necessary for the formation of limited liability companies.
- After filing the Articles of Organization, you will need to complete additional steps, necessary for the proper legal and financial functioning of the LLC, like drafting an LLC operating agreement or obtaining an EIN.
- Business formation services like ZenBusiness can significantly streamline the process of online filing Articles of Organization, therefore allowing you to focus on running your enterprise.
What Are LLC Articles of Organization?
Articles of Organization are part of the legal documents used in the creation of a limited liability company (LLC). They essentially serve as a charter and include essential details about the company: its name, purpose, members, and the way it will be managed.
This document is comparable to a birth certificate for your LLC, providing it with a legal existence. Filing it with the appropriate state agency is an essential step in the formation of an LLC.
Why Do You Need to File Articles of Organization
Filing Articles of Organization is essential for registering your LLC and establishing it as a separate legal entity. This vital step secures your LLC business name within your state’s office records, laying out your LLC’s Articles of Organization, which contain crucial details about the business.
Neglecting this step could lead to legal and business financing headaches. Therefore, it’s important for any new business owner intent on setting up a structured and legally sound business entity.
How to File Articles of Organization
Filing the Articles of Organization is a pivotal step in establishing an LLC. In our hands-on exploration, we’ve discovered a systematic approach to accomplishing this task.
1. Check Your State’s Secretary’s Website
First thing first, visit the Secretary’s website associated with your state. We’ve found that the process can vary from state to state, with some states, like New York, requiring publication. Hence, familiarizing yourself with your state’s rules is crucial.
2. Gather all the Required Information
Once you’ve gained comprehensive knowledge about your state’s digital and physical submission, it’s time to assemble all the required information to register your new LLC.
- Identification of the limited liability company: Foremost is the identification of your company. Select an appropriate and available business name to ensure your uniqueness and comply with state laws related to naming.
- Official location of the limited liability company: This involves the business mailing address, which may be the same as the physical address unless you utilize a separate mailing facility. Some states might require a street address to be on public record as the LLC address.
- The date when you will start the operations: Further, you need to be certain about when you will commence operations. The effective date is an essential detail when you write Articles of Organization.
- Credentials and location of the designated statutory agent: Finally, compile the credentials and the location of your designated registered agent. Your registered agent, either an individual or a commercial institution, stands legally liable to receive and process legal paperwork on behalf of your LLC. A business owner can serve as their own registered agent, but we recommend checking local regulations.
3. Be Ready with Information about Your Company’s Structure and Members
Before filing the Articles of Organization and paying the filing fee, ensure you have accurate and detailed information about your company’s structure and its members. This includes:
- Nature and objectives of the LLC: Nature refers to the business sector your LLC operates in, while objectives refer to its goals. This could be anything from providing consulting services to selling handmade crafts. Be precise.
- Data of the members, managers, and officers involved in the LLC: This refers to the basic information such as names, addresses, and member titles of all key personnel. This specific data of the members, managers, and officers involved in the company will be recorded in state records, making it public information in most states. You will also need to specify if your company is member-managed or manager-managed.
4. File the LLC Articles of Organization Form
Filing the Articles of Organization requires a filing fee, the cost of which varies by state. This form can be found on your state’s Secretary of State website.
While this document can sometimes be complex, our expert analysis indicates that it normally consists of basic questions about the LLC, which you may comfortably fill in. You can either file the document online, by mail, or in person.
The processing takes between 1 and 3 weeks, but filing online with expedited processing can get your documents approved in 24 hours.
5. Publish a Notice (Only in States that Require One)
In some states, like Arizona and Nebraska, small businesses are mandated to publish a notice in a local newspaper for three consecutive weeks, announcing the formation of their LLC.
Even if not required, we’ve gained valuable insights from advising clients that this can serve as a proactive business move, creating awareness and brand trust among community members.
How to File LLC Articles of Organization by State
If you are wondering where to start when creating an LLC, here is a list of the LLC Articles of Organization filing fees and institutions that you need to submit for each state:
The above prices specifically cover the LLC Articles of Organization cost. When initiating an LLC, the filing fees encompass the Articles of Organization, name reservation, online filing tax, and potentially additional taxes, depending on the state. To find out the complete filing fee expenses, you can refer to our article titled ‘What Is the Total Cost of Forming an LLC?‘ where we provide a breakdown of the total fees for each state.
What to Do After Filing the Articles of Organization
Post-filing the Articles of Organization and paying the filing fee, there’s a comprehensive series of steps to ensure your company is properly structured and armed with the legal and financial tools it needs.
These steps paint a crucial backstage picture of what it really takes to pivot from the initial idea to a fully operational LLC.
Draft an Operating Agreement
The first piece of our post-filing puzzle is drafting an operating agreement. This is not merely optional paperwork. An LLC Operating agreement is the backbone of your LLC, defining how it will run and who owns what percentage of the business.
It provides clarity and prevents conflicts among LLC members.
Obtain an EIN
Obtaining an Employer Identification Number (EIN) is essential, not just for identity but also for federal tax purposes. An EIN is a unique nine-digit number assigned by the IRS, indispensable for filing LLC taxes, hiring employees, and opening an LLC bank account.
This study has shown that 88.1% of the EIN applications are filed when an LLC is formed, reflecting the importance of this document, even for small owners registering a sole proprietorship.
Open a Business Bank Account
The next requirement, opening a business banking account, brings financial distinction between personal and business finances. While it adds an extra layer of liability protection, it helps establish your LLC’s credit history.
From our extensive knowledge of dealing with financial institutions, opening an LLC bank account has repeatedly proven to fortify the credibility of the business entity, protecting personal assets from potential business litigation.
Get the Permits or Business License Your LLC Needs
The nature of the industry you’re involved in dictates the type of business license or permit required. The cost of not fulfilling this requirement can be incredibly expensive, ranging from painful fines to shutting the business down.
We advise checking with your local or state’s secretary to find the necessary business licenses and permits.
Stay Compliant
Finally, the last step, but by no means the least, is ensuring legal compliance. This includes everything from submitting an annual report to paying yearly fees or taxes, depending on your state’s specific requirements.
According to this research paper, hiring a compliance service can help small business owners stay compliant simply by being motivated to maintain a good image in front of their collaborators.
On a scale from 1 to 5, the desire of LLC owners to maintain the respect of their business attorney or compliance professional is 3.14, therefore above average.
Articles of Organization vs Articles of Incorporation
When comparing the Articles of Organization and Articles of Incorporation, it’s crucial to understand that these documents serve similar yet distinct functions for different business structures.
- Articles of Organization: As previously mentioned, this document sets the groundwork for forming a limited liability company (LLC). Filing Articles of Organization with the appropriate state government allows an LLC to legally exist.
This operation outlines core aspects such as the business name, the purposes for which the LLC is formed, and crucial players like the LLC’s registered agent, who is responsible for receiving legal notices on the LLC’s behalf.
- Articles of Incorporation: On the other hand, Articles of Incorporation are for establishing a corporation.
While they too involve filing with the state agency, paying a filing fee, and providing key information such as the LLC name and address, the contents in these documents can be distinctly more complicated, often outlining stock affairs, for example.
Corporations may also need to appoint a resident agent, similar to an LLC’s registered agent.
How Can a Business Formation Service Smooth Things Out?
While you can file your own Articles of Organization, business formation services can streamline the process of filing your Articles of Organization, liberating you to focus on your enterprise.
Take ZenBusiness, for instance. Backed by our extensive knowledge, we confidently recommend their services. ZenBusiness helps you create Articles of Organization and files them on your behalf at no cost.
They help in creating robust operating agreements, ensuring your business purposes align with regard to tax flexibility.
A trustworthy filing service might be the helping hand your business needs to start on a firm footing. As we’ve learned over the years, a good start is halfway to success.
