In this post, I explain everything you need to know about articles of organization including what it is, what you need in order to file your articles of organizations, and how and what you can change them if need be.
What Are Articles of Organization?
The Articles of Organization is essentially a public document and outlines the important details of your business. It is a perquisite to establishing your LLC as a registered entity in your state of formation.
It is the document that creates the limited liability company and sometimes known as the Certificate of Organization, Certificate of Formation, Operating Agreement, LLC Agreement and LLC Partnership Agreement in certain states.
Why Articles of Organization are Important for an LLC?
The articles of organization are important for a few reasons, the main one being that it officially creates your LLC when filed. The purpose of filing the articles of organization is to organize the company legally and formally.
All LLCs must file them with the chosen state in order to be recognized as a legal entity, regardless of whether the LLC consists of one single member or several members. They establish your business at the state level. The articles of organization will also enact the powers, rights, liabilities, duties and other obligations between the members of an LLC.
What’s Included in Articles of Organization
The articles of organization will give an outline of the basic details about the LLC business. Once they have been filed with the state, it means that your LLC is officially formed!
It is important to highlight that both the LLC’s formation and existence is governed by state laws. Therefore, the information of what should be included in the articles of organization differ depending on the state.
Nonetheless, the basic information is generally the same when filing the documents, and those include:
- The exact company name: Be careful not to choose a name for your company that has not been taken yet. Additionally, it is normal for states to require the inclusion of LLC at the end of your business name. Make sure you do not include words reserved for regulated industries such as “bank” or “insurance.”
- Business Address: A complete address for the main place of business where your LLC is located is the principal requirement, and where your mail will be directed. P.O. Box addresses are usually not permitted in most states – so make sure to check it beforehand.
- Description of company’s business and its purpose: For some states, general lines surrounding the purpose of the business, such as, “to engage in lawful activity,” will do just fine. However, some states require a more specific statement regarding what the LLC will do. LLC’s can be used for many different purposes and provides good flexibility. This means that you should not be worried about stating your purpose more broadly within the possibilities.
- Registered (or statutory) agent: this is a requirement in all fifty states. The person or business chosen by the LLC that has agreed to accept service of lawsuits, legal papers and other official documents on behalf of the company. This section must have the name and street address of the registered agent. Also, said agent might have to sign a form acknowledging and accepting the position in some states. It is possible to serve as your own registered agent, but hiring a professional service is advisable.
- Information about company owners, managers and officers: Each member of an LLC is an owner of the company and must be listed in the articles or organization.
- The start date: Here you should insert the effective start date of your LLC. This is the day the business has been approved by the state. Nonetheless, you can choose to delay your effective start date for up to 90 days from the day your articles of organization are approved.
- Duration of Formation: you can choose between your LLC being indefinite or perpetual. Indefinite LLC’s means that the business will exist until a certain event or specific date occurs. If you choose an indefinite LLC, said date or event have to be designated as the dissolution date on the articles of organization. However, if you choose to form a perpetual LLC, the business will exist for an unlimited duration, so no dissolution date is required.
How to File Your Articles of Organization
- Go to the state’s Secretary of State website.
In some states, the name of the office for business filings or the document name may be different. The act that creates the LLC is the filing of articles of organization with the secretary of state.
- Answer or fill in all of the required sections.
States have official forms that must be used for the submission of the articles of organization for an LLC. We recommend to always check the website of the Secretary of State’s office of your choosing to determine whether you need to use a specific form when preparing the articles.
- Each owner of the LLC must provide their signature.
It is normal that States require at least one organizer of the LLC to sign and date the articles of organization. However, if your LLC is member-managed, it is likely that all the initial members of the LLC will need to sign the articles.
- Pay the required filing fee.
The one-time fee when filing the articles of organization for the first time vary from state to state. After that, there may be an annual or bi-annual fee depending on your state of formation. This ongoing mandatory fee keeps your business in compliance.
- Send the Articles of Organization to the applicable Secretary of State
This is primarily done in person. But nowadays there are a few states that allow for e-filing or mailing the documents.
Articles of Organization vs Operating Agreement | What is the difference?
Both of them are documents relating to the formation of the LLC. Articles of organization is a document filed with the state’s Secretary of State of your choosing when registering for an LLC. It formally creates the LLC.
Meanwhile, an operating agreement is the document containing the relationships between LLC’s members and the company. They will look to this document when they need to resolve issues or disputes within.
All fifty states allow for LLCs to adopt an operating agreement, giving it full force and effect. The operating agreement is not registered with the state, unlike the articles of organization.
The operating agreement is one of the most important documents for your LLC. In reality, it is an internal agreement between members on the handling of daily operations, dispute resolution, which also governs the management and operation of the company and can describe the economic and business arrangement of LLC members.
This document provides the LLC with the capability to govern their business the way the members prefer instead of state rules that would serve as default in case there is not an operating agreement in place.
By keeping an operating agreement, members can refer back to a clear set of rules that they have already agreed to. It can help reduce arguments and disagreements.
That being said, all members are required to sign it because it is only enforced against parties to the agreement.
There are some general topics that all LLC Operating Agreements should address:
- Business name and official address.
- Member names.
- LLC’s Statement of Purpose.
- Capital accounts and money or property members contributed.
- LLC’s management structure.
- LLC’s organizers’ names (and managers if applicable).
- Dispute resolution processes.
- How cash, profits, and losses get shared among members.
- Meeting conduct and voting.
- Duties, rights, and liabilities of managers and members.
- LLC’s duration, termination, dissolution, and amendments.
- Governing law, arbitration, and notice.
A few of the important differences between articles of organization and operating agreements are that, while the operating agreement is undoubtedly important to the company and its daily success and does not need to be registered, the articles of organization bring the LLC into legal and formal existence after its filing with the state, and there is no reliance on it for the LLC’s management and operation.
Articles of Incorporation vs Articles of Organization | What is the difference?
Articles of incorporation (sometimes called certificate of incorporation) are also different from an articles of organization. While there is no need to highlight the importance and requirements of the articles of organization, the articles of incorporation are important to legally establish the corporation in a particular state, along with identifying its business information.
They are close in function and form to the operating agreements, since they hold akin information about the LLC, like its name, company purpose, business owner names, issuance of stock, how it will operate, the management, dispute resolution and more.
However, and this is important, much like the articles of organization, the Secretary of State must also have articles of incorporation on file. When your LLC’s articles of incorporation are approved, they register the business as a separate legal and tax-paying entity apart from the company’s owners.
Is it possible to change my articles of organization? If so, how?
After the original articles of organization have been filed, it is important to remember that there are certain events that could ensue an amendment to them. Then yes, it possible to change them.
It is indeed very common to do so, since the business may grow and evolve from what once was their original conception. It is a simple process and amendments, as well as corrections, can easily be filed along with the appropriate filing fee.
In most states, you can obtain a form to file a change at the Secretary of State’s Office or other corporate division. There are certain types of changes that are commonly filed for amendments.
Furthermore, the information you are allowed to change is the same, whether you choose to restate or file an amendment to your LLC’s articles.
There are different reasons of when it is appropriate to file an amendment for your articles of organization including:
- A business name change – it needs to be filed with the state to be official. Also, you need to wait for the approval of the new name before you can legally use it). Let federal, state, and local tax agencies know about your LLC’s name change.
- Updates to the registered agent’s name, address, or contact information of the LLC.
- A change in ownership or membership – some states require that this amendment be done formally, while it is possible sometimes to have it only internally. Transfers of large portions of ownership, over 20 percent, should always be filed with an amendment.
- Change to the previously reported business purpose.
- The number of authorized shares the LLC is allowed to distribute.
- Any changes in the company’s business activities.
However, take note of what cannot be changed in your articles of organization, which are:
- The filing date
- The name of the incorporator or organizer
- The name of the registered agent if filing Articles of Amendment
It is very important to note that the name/number of the specific form that you need to submit to change your articles of organization are different from state to state.
How is the approval process for changes to the LLC’s Articles of Organization?
- Determine whether the change/amendment is necessary – check the above section, for example.
- Obtain approval for the change/amendment as required by the LLC’s operating agreement – most times it involves a written resolution stating that the owners agree with the necessary update.
- Complete appropriate government forms to change the articles of organization – it is very important to note that the name/number of the specific form that you need to submit to change your articles of organization are different from state to state.
- File articles of amendment with the appropriate State Agency – in some states that can be done online and/or mailing the required forms.
- Pay any fees for the articles of amendment to change an LLC’s information – note here that fees also vary from state to state.
- Update the company’s documents and marketing materials with the changes, as well as alert the bank, vendors, suppliers and insurance companies if needed.
Frequently Asked Questions:
- How to get a copy of articles of organization?
It is possible to find a copy on the Department or Secretary of State website for the state under which your company has been filed. Once you find your state’s link, enter your company name and entity type to find the document.
- Are the Articles of Organization public record?
Yes, the articles of organization is public record. Some business owners choose to use a registered agent service so that their private information is not made public.
- What is restated articles of organization?
Restated articles of organization are a modified version of the original document you filed to form the LLC.
- Where are the Articles of Organization filed?
Generally, the articles of organization are filed with the Secretary of State’s office in the state in which the new LLC is formed. On each of the state’s website you will find the necessary forms in order to file them and which fees to pay, since they vary from state to state.
- Do the Articles of Organization need to be notarized?
If initial directors are named in the articles of organization, they are knows as the “incorporators” and so, they have to sign the document in the presence of a notary public.
- When do the Articles of Organization expire?
If you have a perpetual LLC, they will not expire. However, if you choose an indefinite LLC, it will expire eventually in a specific event or date decided by you when filing the articles of organization. Additionally, the LLC Itself may end up being dissolved for a number of different reasons.
- Is the Articles of Organization a business license?
The articles of organization is not a business license. It is the document that when properly filed, makes your LLC an official business entity with the state.
- Is the Operating Agreement the same as the Articles of Organization?
The articles of organization is filed in your chosen state where the LLC will be registered and primarily operated in. On the other hand, an operating agreement is the document that members of the LLC look to when issues of various nature arise from within the company.
- What are the other names for the Articles or Organization?
Articles of organization are also referred to as a Certificate of Formation, Operating Agreement, LLC Agreement and LLC Partnership Agreement in certain states.
- What should be included in the Articles of Organization?
- Name and address of the registered agent
- Principal place of doing business
- Name of the company
- Purpose of your business
Do you need the Articles of Organization for an LLC?
Yes. When forming an LLC, you are required to file the articles of organization with a state government agency. After the document is filed and approved by the state, the new entity is legally created as a registered business within the state.