Articles of organization resemble articles of incorporation: These documents outline the initial statements required to form a limited liability company (LLC).
Business owners forming an LLC need to fill out articles of organization to document precise details about their company’s identity.
In some cases, you’ll need to fill out an operating agreement supplementing your organization articles. Here’s everything you should know about why you need articles of organization. We’ll tell you what information is required to fill them out, how they relate to operating agreements, how to file them and how to get copies for your records.
Articles of Organization: Who Needs Them?
In most states, articles of organization are required by anyone who wants to form a business structured as an LLC. You can think of articles of organization as the equivalent of a birth certificate for an LLC.
What’s an LLC?
An LLC is a type of business entity that combines some characteristics of sole proprietorships, partnerships and corporations:
- As with corporations, LLCs provide members with legal protection from liabilities incurred by the business.
- At the same time, as with sole proprietorships and partnerships, LLCs have relatively simple paperwork and tax requirements.
- Profits and losses for LLCs typically pass through the corporation to its members, who report them on their personal tax returns, but you also have the option of choosing to be taxed as a corporation.
These features make LLCs a popular business structure for individuals or s small group of people. If you want to form an LLC, you will need to file articles of organization.
Articles of Organization and Your LLC
When you file articles of organization, you officially record the basic identifying details about your LLC with your secretary of state. This allows your LLC to open business bank accounts and file taxes.
Requirements vary from state to state, but identifying details filed with your articles of organization typically include:
- Your exact business name
- A brief description of what your business does
- Your principal business address
- The name and contact information of your company’s registered agent (the person authorized to receive legal papers on your company’s behalf)
- Identifying information about your company’s owners, managers and officers
These details help identify your business as a unique entity. They also help financial and tax authorities know where to contact you and who is authorized to receive paperwork on behalf of your business.
Articles of Incorporation vs. Articles of Organization
The articles of organization for LLCs must file resemble articles of incorporation. Articles of incorporation are used to create corporations other than LLCs, such as C corporations and S corporations.
Articles of incorporation include some of the same basic identifying details as articles of organization, such as the business name and the name and contact information for the registered agent. They also include other information specific to corporations, such as:
- A list of board of directors
- Authorization of shares
- Information about profitability
Whether you should file articles of organization or articles of incorporation depends on what type of business entity you wish to create. You need articles of incorporation if you’re forming a corporation. If you’re forming an LLC, you need articles of organization.
Articles of Organization vs. Operating Agreement
Some states require that when you submit LLC articles of organization, you also submit what is known as an operating agreement. This is an LLC’s equivalent of articles of incorporation that lay out the directors and share authorization of a corporation. An operating agreement outlines how the decision-making and financial structure of your LLC is divided among your members.
Elements of an operating agreement may include items such as:
- Voting rights of members
- How the company will be continued if one member dies
- The manner in which managers run the company and what their rights and responsibilities are
- How the LLC divides profits and losses
- The way the LLC makes distributions
Laying out these items is crucial if your LLC has more than one member. Some companies create one even when it isn’t required. If your LLC only has one member, you don’t have to worry about a complex operating agreement.
Sample LLC Articles of Organization
Let’s imagine you’re a solo business owner starting up an LLC. Your articles of organization might include items such as this:
- Company Name: XYZ Gadgets, LLC
- Principal and mailing address: John Doe, 1234 Main Street, Smallville, IL 12345
- Registered agent and mailing address: John Doe, 1234 Main Street, Smallville, IL 12345
- Management: This LLC is member-managed
- Members: John Doe, 1234 Main Street, Smallville, IL 12345
- Purpose: The purpose for which this company is organized is to sell widgets.
- Correspondence information: John Doe, 1234 Main Street, Smallville, IL 12345
There will be additional lines for signatures and other formalities.
This articles of organization example illustrates how your filing might look if your LLC only has one member. If you have more members, you will need to list them. You also may need or wish to include an operating agreement.
How to File Articles of Organization
To file articles of organization, you will need to follow four main steps:
- Visit your secretary of state’s website to find an itemized list of what you need to submit, along with what fees you will need to pay.
- Collect the information you will need to file, including your business name and address, along with names and contact information for your members and registered agent.
- Prepare to answer questions about how your LLC will be managed and what the nature of your business will be.
- Complete the article of organization form provided by your secretary of state.
Most states provide forms in PDF format that you can fill out and submit online. Your state may also have you fill out the form on their website by entering answers to questions into different fields. Alternately, some states require you to submit your form through the mail or in person. In this case, you can use a template or create a customized form in consultation with your registered agent or legal advisor.
After filing, you will need to wait for approval. Depending on your state and the current workload, the approval process may take anywhere from hours to weeks.
A common mistake to avoid is choosing a business name already in use. This is one of the most common reasons applications get rejected. Avoid this issue by doing a business name search before filing your paperwork.
- Make sure your company name records your full business name, including a comma followed by the term “LLC” or “Limited Liability Corporation.” (This distinguishes your business from other companies that may share a similar name but aren’t structured as LLCs.)
- Ideally, choose a registered agent who has legal experience and is available during business hours.
- Include an operating agreement if it is required
- If possible, set up a business checking account before you file, and use a business check to pay for your filing fee.
Remember: Double-check for correct information, typos and other errors before submitting anything.
Articles of Organization: How to Get Copies
State laws usually require you to keep a copy of your articles of organization on file. You may be able to download a copy of your document as soon as you finish filing it.
After filing, you will usually receive an email with a link to a download page with a copy of your filed document. After your submission is approved, you should receive another link to a copy of the approved document.
File Your Articles of Organization to Get Your Business Running
Filing articles of organization is a necessary step to get your LLC business up and running. Fortunately, it’s a relatively simple task that shouldn’t usually take more than a couple of hours and a small fee. That said, it may require a larger fee if you need your registered agent or legal counsel to help you draft a customized document.
If you need start-up financing to cover this or other start-up fees, you may wish to consider seeking a business term loan or line of credit.