Like all business structures, limited liability companies (LLCs) are governed by the individual states. Some states are progressive and comprehensive in their laws governing LLCs, whereas others have laws that seem to be last updated in the 1990s.
In contrast, corporations have been around for centuries, and after so many years of working out the kinks, the basic structure is pretty much the same no matter where they’re domiciled.
The disparity in LLC law from one state to another isn’t necessarily a drawback, but it does mean that you must do your homework every step of the way to make sure that you don’t inadvertently structure your LLC in a way that your state doesn’t allow.
You’d be surprised how many attorneys and national incorporating companies fail to take individual state laws into account. Whatever is in the state’s statutes will pervade all aspects of how your company is structured, from what is contained in your articles of organization to how you can issue membership shares to what you can and can’t dictate in your operating agreement.
Never use fill-in-the-blank forms or contracts for your company that you download off the Internet — it’s a rarity to find one that is legitimately state specific and current.
Not only should you know the laws for the state in which you wish to form your LLC, but you should also familiarize yourself with the laws of any state in which you intend to register your LLC to transact business.
To make your life easier, check out this website containing all state laws regarding business entities, real estate, and taxation. Enter the password onesmartdummy. Here, you can view your specific state’s laws, organized by topic.