Are you a startup business looking forward to filing articles of organization for LLC? Well, it’s quite a lot of work. But not impossible. It is one of the ways to make your business stand out.
Join me as I help make articles of organization for LLC more understandable. I’ll tell you;
- What articles of organization for LLC are?
- Where to find information in forming LLC?
- What do you need to gather for filing LLC?
- Whether or not you need to hire an attorney for the job?
What are Articles of Organization for LLC?
Articles of organization for LLC are part of legal documents that states require for you to establish an LLC or limited liability company. The papers help a business entity build the powers, liabilities, rights, and other obligations between LLC members.
Furthermore, the articles of organization for LLC also help create obligations between the limited liability company and its members. Now, I know that we’ve been handling quite complex terminologies.
Before we go any further, we should clear the fog off your brain.
What Is an LLC or Limited Liability Company?
A limited liability company is an organization system in the United States that offers small businesses or company owners liability protection. That way, the State cannot hold the owner accountable for their company’s liabilities or debts. They combine attributes of a corporation with that of sole proprietorship or partnership.
While this system works in the United States, the statutes range from one State to another. However, the standard principle that cuts across all the States is that the legal entities’ owners are members.
The owners of limited liability companies (LLC) can also be members because many states do not restrict ownership. Therefore anyone can be a member or manager at the same time. These include individuals, corporations, other LLCs, foreign entities, foreigners.
However, not all legal entities qualify to become LLCs though. I mean, if insurance companies and banks, for instance, that would be problematic. That’s an entirely different story altogether. I hope you get the hang of it.
What Is the Difference Between an LLC and a Partnership?
The question may be ringing in your mind concerning the difference between a partnership and an LLC.
A limited liability company divides the business resources from the member or manager’s assets. That way, the State insulates the owner from the problems resulting from profits or losses.
At this point, you should know that this is my favorite entity- formation. And that is because it is pretty easy to form and maintain if you are;
- A blogger.
- Starting a business.
- A small business owner.
At the same time, it would be fair for me to show you both sides of the coin. So are there any shortcomings with this business structure?
Perhaps one obvious disadvantage with LLC is whether the business or company stands or falls entirely in the manager or member’s hands. What does that mean?
I mean that when the owner becomes bankrupt or dies, depending on the law of the State that you are in, the government may terminate your LLC. That is different when you have a corporation. Corporations will stand no matter what happens to you.
We’ve just learned what an LLC is, now you know. Back to our topic of study.
More on Articles of Organization For LLC
It is the state government that files articles of organization. However, most cities and counties have their zoning and business licensing requirements. Therefore every LLC must meet the legal requirements for the area they intend to operate.
All articles of organization for LLC filings require some basic information. These include the following;
- The LLC name and address (It’s primary location also known as a principal place)
- Nature of LLC business
- Name and address of LLC agent. An LLC agent is authorized to take, on behalf of the LLC, delivered legal documents.
- Names of directors, managers, and members of LLC
- A statement of the business’ purpose
After you submit the organization’s articles for LLC., the Secretary of State will review them. Once you have passed approval, the pieces become the constitutional basis for establishing your LLC as a business entity.
That way, your LLC then becomes bound by the state laws. You can say that these articles of organization for LLC serve as a charter.
Where can I Find Information in Forming LLC?
If you are looking for somewhere to start to look for information about forming LLC, that’s not a problem.
It would be best if you typed your question on google.com, and you’ll have more than 54 million sources. That’s what I did, as indicated in the screenshot above.
Even though there is plenty of information on forming an LLC on the internet, you should be careful with your sources. What is the reason for that?
Well, there is lots of false information on the internet. Also, the information you get may not be up to date. Other than that, you are good to go.
Telling you the dangers of getting your information on the internet alone is unfair. Let me give you some tips on searching for accurate and up-to-date information on google.
I’ll use our topic to make your work even clearer.
Step 1: Go to Google.com
The first step is typing google.com on your internet browser. In my case, I use Chrome.
Once you are on google’s homepage, type your query, then click “search.”
Now to step two.
Step 2:Filter Google Results
You will agree with me that Google gives quite many results per search. However, the results you get may not always be relevant to your question. Also, when they are applicable, some may not be updated. That’s why we are here in the first place.
So you have to filter the search results. How do you do that?
Click on the “tools” button. When you click it once, you will see two buttons popping up. See below.
Now to the final step in the filtering process.
When the buttons appear, you click on the “Any time” button. Then choose the time frame you’d want the results filtered to. Check the demonstration below.
Notice the difference?
Below are the unfiltered results
Now below are the filtered result.
I hope you see how much one year makes. I am not saying that old is not accurate, even though it’s true in some cases.
The general rule is that the more recent your source is, the more reliable it is. States laws vary from time to time. Therefore you have to be updated.
What do I Need to Gather for Filing LLC?
Now that you have some excellent background information regarding organization articles for LLC, what remains is making a decision. Should you decide to go for it or not?
Allow me to show you whether this format is the best for your business. That should make your work easier since you’ll get to know if you qualify. Continue reading.
- You are hiring independent contractors or employees.
- You’re starting a business with more than one person. By default, this is a partnership. But with an LLC, you both (if there’s more than two you) become ‘members’ of the LLC, protecting your ownership and longevity of the business.
When Can You Form for LLC?
You can form an LLC when;
- You are selling your services or products regularly
- You have a good client base; meaning regular and constant customers
- You would want your business to be independent. Having its bank accounts, assets, and liabilities.
- You are working employees or separate contractors
- You are establishing your business with two people or more. In such a case, it is a partnership. Only that LLC protects every member’s ownership and endurance of your business (more on that in the next segment).
If you are still giving it a thought, let me take you through the advantages you will reap. Well, even better, we’ll look at the disadvantages too. Also, I’ll be guilty of leaning on one side of the fence.
The advantages for forming an LLC include;
- Legal protection. Just as we saw earlier, LLC shields you and protects your assets. That way, when your business or company is involved in liabilities, debts, or lawsuits, you lose nothing from your investments.
- Easy taxation. You probably know that owners of corporations suffer double taxation. Well, that’s not the case when you run an LLC. That is because its net income passes down to the company’s owners.
From there, you can record your share of profits and losses in your tax returns.
- You are more exposed. There are probably many businesses doing what you are doing. However, when you form an LLC, you give customers reasons to select your services.
You earn recognition. That is because LLC is an organized system.
- Fewer complications. There’s nothing people dread more than too much paperwork. And that’s a plus for LLC since there is little paperwork involved. Also, there is less record-keeping and also formal meetings.
Also, there are few management roles since you do not have to maintain company directors and shareholders. Also, you do not have to worry about equal distribution.
The disadvantages include;
- Risk of stagnation. As LLC, you cannot give shares to get investors’ attention. Your guess is as good as mine. That leaves you with limited space to grow your business.
- Taxation difficulty. If the government considers your LLC a pass-through entity, you’ll have to pay taxes on your part of profit and loss. You may receive a refund from your company or not.
- Significant changes call for high costs. There are annual fees that you will have to pay for your LLC Technically, that will increase the cost of having an LLC.
Looking at the advantages and disadvantages from a neutral point of view, you will notice that the advantages;
- Are more in number than the advantages
- Outweigh the disadvantages.
Therefore, forming an LLC is worth it. But what are the requirements?
You Select Your State
The golden rule for new business owners is that you must form an LLC in the State you reside in and do your business. However, suppose you intend to do your business in a different state. In that case, you have to register a foreign LLC in that specific State.
Give Your LLC a Name
Your business name is essential when starting up. Remember, it shouldn’t be similar to an existing one. Therefore, you should perform a name search online for uniqueness.
States have established some naming rules. These include;
- The company name you choose has to include the phrase “limited liability company.” Also, you can use either of these abbreviations; LLC and LLC.
- The company name should not be one that would confuse the LLC with government agencies like State Department, FBI, etc.
- The State restricts words like Bank, University, Attorney, among others. Therefore, for you to include them in your LLC, you’ll have to dig deeper into your pocket.
Select a Registered Agent
As we stated earlier, the registered agent’s role is to receive or send legal documents for the company. The legal documents include legal summons and notices filed by the State.
Most states expect you to appoint a registered agent who is a resident of your business’ location. However, if doing that is a great deal, you can also hire a professional registered agent service. It’s an excellent move if you want to be law-abiding.
File Articles of Organization for LLC
To make it official, you have to file your formation documents with the Secretary of State office. The name given to articles of formation differs with each State. Some call it Certificate of Formation, while some Certificate of Organization.
You can file the information online and then send it through the mailing address provided. You can also always seek a professional to do it to avoid errors. The filing fee should be about $100. However, the cost may differ across the states.
An LLC Operating Agreement
What is an LLC operating agreement? It is a legal document that clarifies your LLC’s ownership and member roles. Here you formulate the financial and working relations between owners (known as members) and among members and managers.
An operating agreement has six main sections. These are;
- Capital Contributions.
- Management and Voting.
- Membership Changes.
Get an FTIN also known as EIN
What in the world is an FTIN? Well, it’s an abbreviation of the term “Federal Tax Identification Number.” People use another name when referring to it, like Employer Identity Number (EIN).
Your FTIN works like a Social Security Number for your limited liability company. It will be pretty helpful in;
- Opening your LLC’s bank account.
- Hiring your employees.
Do I Need an Attorney to File Articles of Organization for LLC?
Most states do not make it a requirement for you to hire an Attorney to file articles of Organization for LLC. It’s for you to make that decision. Easy does it.
But which option is easy? Well, that depends on one factor;
- How familiar are you with Business Law?
- How complex is your business structure?
While it is not a requirement to consult an attorney, I think you are better off hiring one. The reason is that you avoid the risk of making mistakes.
Is hiring an attorney expensive? You can use an online service provider instead. It is less costly compared to hiring an attorney and equally effective.