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When you're creating an LLC, the Articles of Organization (sometimes referred to as “Certificate of Formation”) is usually the first document you'll file -- it's what you file with one state, and it brings your LLC to “life.” Without the articles, your company does not have legal authority to conduct business. Let's go over how to fill one out. Also note that most of the time, you can fill it out on your state agency's website.
To get started, go to the Secretary of State Website for the state in which you are filing (or conduct a search for “[Name of State] secretary of state.” You’ll need to find the appropriate section for starting a business (sometimes will be referred to as business entity filings). Be sure you follow the appropriate links to forming a Limited Liability Company.
Name of LLC
This is where you’ll list the name of your LLC. Be sure to include your version of LLC, Limited Liability Company or other variation allowed by your state’s laws.
Purpose of LLC
In this section, you indicate the purpose of your LLC. It’s generally a good idea to keep the purpose broad. Getting too specific for your LLC’s purpose could cause problems down the road if you wish to change the company’s operating strategy, i.e. if you operated outside your LLC's purpose, you're arguably breaching your fiduciary duty to the company.
Most states allow something like this:
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Example “The purpose of the LLC is to engage in any lawful act or activity for which limited liability companies may be organized under the Act and to engage in any and all necessary or incidental activities.” |
You can always amend your operating agreement later if you wanted to narrow the purpose. You might ask, "Why would I want a narrow purpose?" Here's an easy example -- imagine you and your friend are owners of your LLC. Your LLC owns a restaurant that sells sandwiches. You're obsessed with Dr. Pepper Zero, and your friend despises it.
Your friend might hate it so much that they want to include it in the LLC's purpose, e.g. "The purpose of the LLC is to engage in any lawful act or activity for which limited liability companies may be organized under the Act and to engage in any and all necessary or incidental activities, except that the LLC shall not purchase or sell in any way Dr. Pepper Zero.” (We love that soda, by the way).
Registered Agent
Your registered agent receives all your court filings. It must be someone or an entity with a physical address in the state where you’re filing the Articles.
Note that the registered agent will receive all official mailings. So, make sure that the registered agent’s information is always up to date with the Secretary of State. Often, the LLC’s owner is the registered agent. However, you can also choose a third-party service for this function.
LLC Management
When you file your Articles of Organization, you need to select whether your LLC will be member or manager-managed.
A manager-managed LLC designates someone (or several people) as the manager to oversee the operations of the LLC. A member-managed LLC gives all the members the authority to manage the LLC’s operations. In many ways, it doesn’t make a difference for single-member LLCs.
We usually recommend manager-managed LLCs for single-member LLCs because then, if something happens to the member, they can designate another party to run the LLC. But it doesn’t make a big difference for 95% of LLCs.
However, if you’re a multi-member LLC, it affects how you want to govern. If you like splitting up governing with all the members, then member-managed is better. If you're going to appoint one person to run operations, then manager-managed makes more sense.
LLC Duration
This section indicates the duration of the LLC. Almost every company chooses perpetual (meaning the company lives forever), but you can input a specific date or event in which the company will no longer exist. Over 99% of LLCs choose perpetual, however. You can dissolve the LLC later if necessary.
LLC Organizer
Your organizer is the individual who files the LLC’s articles of organization (sometimes called a “certificate of formation.”). Most people choose themselves. And sometimes, if someone hires an attorney, the attorney will be the organizer.
Effective Date of the LLC
This is simply the date your LLC goes into existence. In most cases, you'd choose the date you're going to file your Articles. If you leave the section blank, this happens automatically.
But, if you're coming up on a due date where you'd have to pay an annual fee or franchise tax, it could be wise to push it out beyond that date. For example, if you're filing your LLC on December 23 and your state has an annual fee you would incur on January 1, it probably makes sense to wait the extra nine days to file. Or, if you just want to get it filed on December 23 and your state allows delayed filing dates, you would set the effective date for January 1.
Do you need a lawyer for this?
The biggest question now is, "Do you need to hire a lawyer for help?" Sometimes, yes (especially if you have multiple owners). But often for single-owner businesses, you don't need a lawyer to start your business.
Many business owners instead use tools like Legal GPS for Business, which includes a step-by-step, interactive platform and 100+ contract templates to help you start and grow your company.