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Filing your company’s articles of organization is one of the first steps you take toward legally establishing a new business.
While your articles of organization give you legal authority to operate as a limited liability corporation (LLC), there are critical legal requirements that you must follow when filing them. A single misstep can can lead to issues down the road that map be costly to clean up.
The article outlined below contains everything you need to know about articles of organization.
What are Articles of Organization?
Articles of organization, also commonly referred to as a certificate of formation, are legal documents that you file with the state when you register a limited liability company (LLC). You must register your articles of organization with your local secretary of state’s office if you want to obtain an employer ID number (EIN) and a business checking account.
LLCs make up a large part of business structures, thus requiring them to file articles of organization. Types of businesses that operate as LLCs include:
- Construction companies
- Service providers
- Commercial contractors
- Internet marketing companies
- Technology companies
- And more
The purpose of an LLC is to separate the business owner’s personal assets from their professional ones. If the company cannot pay its debts, then aggrieved parties cannot hold the business owner personally accountable. However, you cannot receive these protections without first filing your articles of organization with your local Secretary of State’s Offices.
Here’s an article about articles of organizations.
What’s Included in Articles of Organization
Your articles of organization will depend upon the requirements contained within your state’s business laws. Regardless of the requirements, the articles of organization will tell your state key details about the legal operation of your entity, which makes it a fairly straightforward document to complete. However, indicating the wrong information can lead to potential legal problems in the future, so it is vital to get this aspect of your business contracts right.
Here’s what’s included in articles of organization:
- Name and address of the registered agent
- Name and address of the company registrar
- Principal place of doing business
- Name of the company
- Doing Business As (DBA) designations
- Purpose of your business
- Type of business structure
You generally do not have to create a document from scratch. The most common mistake made on articles of organization forms is making assumptions when you have a question rather than discussing it with business lawyers that work on these documents daily. Your decisions will carry legal implications upon which your business is based, which means that you should consider them carefully.
This article further covers what’s included in an articles of organization.
Articles of Organization vs. Operating Agreement
There are significant differences between an articles of organization vs. operating agreement . The articles of organization is the document that the Secretary of State’s offices requires for a business formation or when you register a business name. The operating agreement is the business contract that LLC members agree upon for handling disputes or dissolving an organization.
An operating agreement typically includes the following 10 items:
- Ownership percentage and equity structures
- Capital contribution requirements
- How profits and losses are distributed and allocated
- Names of managing members
- Voting rights of individual parties
- Dilution of ownership
- Transfer of ownership
- Buyout agreements
- Dissolution terms and conditions
- Other pertinent instructions to run the business
While an operating agreement is a separate document from your business’ articles of organization, you can see that they go hand-in-hand. You need to draft your operating agreement when establishing an LLC in your state to achieve full compliance.
Find out more about regulations for limited liability here .
Articles of Organization vs. Articles of Incorporation
There are also key differences between an articles of organization vs. article of incorporation . Articles of organization are the legal documents required to form a limited liability corporation (LLC). Articles of incorporation, also commonly known as certificates of incorporation, perform the same function with the single exception that they are designated for corporations instead of LLCs.
The main 8 elements of the articles of incorporation include:
- The corporation’s name
- Your principal place of business
- Registered agent name and address
- Statement of purpose regarding your operations
- How long you plan to operate (indefinitely is acceptable)
- Type and number of shares issued
- Officer name and address
- Date and signature line
You should only create articles of incorporation if you are planning on starting a corporation (C-Corp, S-Corp, etc). The type of business entity and structure you choose depends upon your specific needs and situation. Consult with corporate lawyers and other professionals to determine which option is right for you.
How to File Articles of Organization
Filing your articles of organization is essential to register a legally established business entity. The process varies from state to state, which means that you should review your legal requirements with business lawyers beforehand. You will also want to ensure you complete all document requests accurately to avoid delays or denials.
Follow these steps to file an articles of organizations:
- Step 1. Select a name for your company
- Step 2. Download a bonafide copy of the articles of organization form from your Secretary of State’s website
- Step 3. Name a registered agent
- Step 4. Draft and sign an LLC operating agreement
- Step 5. Establish if you want to use members or managers
- Step 6. Sign the articles of organization
- Step 7. Return the form to your Secretary of State’s Office
- Step 8 Pay the appropriate filing fee
- Step 9. Receive your notary stamped copy of your articles of organization
- Step 10. Retain a copy of the articles of organization for your records
As you can see, this process is somewhat lengthy. You may also have questions throughout the process. Get help filing your articles of organization to ensure the process goes as smoothly and quickly as possible.
This article further describes how to file articles of organization.
Image via Pexels by Christina Morillo
Get Help Filing Articles of Organization
Get help filing articles of organization by engaging a competent business lawyer that understands your goals. They can provide legal guidance and advice as you navigate the process while avoiding legal mistakes. Legal mistakes can cost your company a significant amount of money in the future, not to mention cause damage to your reputation.
Business lawyers can also offer:
- Ongoing legal advice and counsel
- Dispute management should an issue arise
- Representation during negotiation discussions
- Legal drafting services to ensure you have rock solid contracts
- Act as a sounding board when mulling over your options
- Communications between you and other parties
- Refer you to other attorneys if you face another unrelated legal matter
- Connect with legal experts and witnesses
- Other types of legal services as necessary
Business lawyers leave no stone unturned when it comes to protecting your and your company’s legal rights. Ultimately, you should hire business lawyers when you make uncertain decisions involving your legal rights and obligations.
Failing to follow through on contractual and financial obligations can result in criminal charges or a civil court matter. Instead of leaving your business exposed, work with a legal professional that can translate your business strategy over into the legal world. Post a project today on ContractsCounsel.
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