Before Filing Your Articles of Organization for Your Limited Liability Company
The articles of organization is your limited liability company’s (LLC) most important document. Why? Because you can’t even be an LLC until you create and file your articles of organization with your Secretary of State’s office. After this is done, your LLC is formed.
Before creating your articles of organization, you need to establish some pretty important things:
- What is the name of your LLC? Is the name available for use? Any particular name may be available for your LLC, but is it available for use in your state? Has it already been trademarked by another company? Trademark infringement can be a time-consuming and costly experience. Even if you have no evil intentions of making money off someone else’s name, the courts won’t be lenient. Just as with a speeding ticket, ignorance is not a defense.
- What is the purpose of your LLC? This is an easy one. Before going into business, you need to know what sort of business you are in! This can be as specific or broad as you like. However, I recommend that you keep your company’s purpose broad so you aren’t limited by what you put in your articles of organization.
- Is your LLC going to be member-managed or manager-managed? Are all investors going to have a say in the day-to-day business decisions, or will a select few handle everything? Do you want to manage your own LLC, or would you rather step back and let someone else handle it?
- Who will be the initial members? In some states, you’re required to list your initial members in your articles of organization — especially if you are member-managed. Therefore, you should have an idea of who the initial members of the company will be before forming. You can always change this later; however, it can be time consuming, depending on the process that you lay out in your operating agreement.
- In which state(s) are you going to form your LLC? LLC and tax laws vary from state to state — some states have no taxes, others have less paperwork, and others less disclosure — and you should take this into consideration when determining where to form your LLC.
- Who is going to act as your registered agent? Every LLC needs to have a registered agent acting on its behalf in every state in which it does business. Have you chosen your registered agent for each state you are registering in? Bear in mind that you must rely on this business if your LLC is ever served with a lawsuit.
Be careful when filing your articles of organization. Although most of the designing and customizing of your entity is done in your operating agreement, some states require that you include certain provisions in your articles. It can be tricky — states differ slightly in their requirements, so if you’re creating and filing your articles yourself, you definitely need to look up your state’s rules.