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A corporation comes into being when the articles of incorporation are filed with, and accepted by, the formation state. An official state filing is also required to form a limited liability company (LLC). Limited liability companies are formed by filing “articles of organization” with the secretary of state (or other office in charge of business formation filings) and paying the required fees.
Each state has its own requirements for the contents of the LLC articles of organization. In all cases, again like the corporation, filing of the articles of organization has two major components. First, you must provide the state with information about your company. Second, you must appoint a registered agent that will accept service of process and other important state documents on behalf of the company. While it is generally true that organizers of an LLC will need to disclose less information about the company than incorporators must disclose, there is a wide variation from state to state in this regard. Typically, however, the articles of organization must set forth:
Many states require that the articles of incorporation specify whether the LLC will be “member-managed” (where all owners participate in the day-to-day decisions regarding the business) or “manager-manager” (where implementation of the strategy is not vested in all the members). Some states require that the LLC’s purpose be stated. In this case, the purpose should be stated very broadly. For example: business will be conducted “for any lawful purpose.” Even if more specific purposes are stated, the general “for any lawful purpose” should also be included. This will avoid amending or restating the articles as the company thrives and moves into new lines of business. A few states require the statement of the LLC’s intended duration, if less than perpetual. This may require specification of what events trigger dissolution of the LLC.
While nearly all the LLC Acts state that optional provisions may be included, most organizers prefer to put specifications regarding the company’s business structure and management to and affairs will be set forth in the LLC’s operating agreement, rather than the articles of organization. Although not required by law, an operating agreement is essential to the good management of the company and the members should put thought into what provisions to include regarding management, expansion and transfers of interests.
Most states provide official articles of organization forms for filing, which can be downloaded from the state website. In some states, use of these official forms is required, while in others use of the state-supplied forms is optional. There are a few states that do not supply any documents. In these states, the organizers (or their attorney) must draft the articles of organization based on the statutory requirements. It is imperative that the organizers follow the state requirements, whether there are state-supplied forms or not. If there is a problem with the formation documents, it is possible that the business will be considered a sole proprietorship if there is one owner or a general partnership if there are two or more owners. If this happens, the owner(s) will lose limited liability and will have unlimited, personal liability for all of the entity's debts and for the acts of the business's employees.
The articles of organization are executed by the individuals who are organizing the company. In most, but not all, states the individuals organizing the company and signing the articles of organization do not have to be members or managers of the limited liability company.
After the articles have been completed and executed by the authorized parties, they must be delivered for filing to the appropriate office. Most states require the filing with the secretary of state, although a few designate another central office for business filings. Some states have additional requirements, such as a county recording or a publication requirement. Working with an experienced business compliance provider, such as CT, can help ensure that your articles of organization are properly filed and all other state requirements are met.
The limited liability company’s existence begins when its articles of organization are accepted by the state, unless a delayed effective date is permitted by law and set forth in the articles
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