There are many steps required before you form an LLC officially. You need to do market research, talk to potential customers, make sure your cofounders are on the same page, and a million other things.
Only then are you ready to file your articles of organization with your state.
That begs the question. What exactly are the articles of organization, does everyone need to file, what is the process, and are there any fees associated with it?
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It’s important to note that things can vary from state to state. Some have unique requirements, higher fees, and so forth. With that being said, this guide will give you an overview you can use to ensure you make the right moves.
What are Articles of Organization?
Think of your articles of organization like the document that gives your business entity permission to start and function. They’re similar to articles of incorporation and are a set of formal legal documents used to form an LLC in a specific state.
Articles of organization are known by multiple names such as certificate of organization or certificate of formation but have the same function.
With the articles of organization, information related to the powers of the company, business purposes, liabilities, duties, and responsibilities of each member of the LLC are codified.
When you file the articles of organization with the state you’ve chosen for your business formation, the state adds your LLC to its official register of companies. The state also gives you official authorization to conduct business.
It’s important to note that each state has unique requirements for your articles of organization. Some may require more information and some may require less. Below are the common pieces of information you’ll need to include.
- The LLC’s physical address
- The business name of your LLC, which needs to be unique in the state
- The details of your registered agent
- Details pertaining to the members of your LLC
- Your LLC organizer’s name
There are additional areas on some forms that ask for the details of the LLC manager. This isn’t required in all instances or states. If the members themselves are managing the LLC then this part of the form may not be needed. If, on the other hand, you hire someone from outside the organization to manage the company then their details will need to be submitted.
Many people get confused about the LLC organizer. This is simply the person that’s submitting the articles of organization. It can be your lawyer, an online LLC service, or even a member of the LLC. After the organization is complete, then this person’s role ends.
Do all businesses need articles of organization?
Surprisingly, no. Many businesses like sole proprietorships, partnerships, and even corporations don’t require articles of organization. Only LLCs have this requirement.
That doesn’t mean there isn’t something equivalent that the other forms of business organization need. For example, corporations are required to file articles of incorporation.
If you’re interested in a different type of business entity contact your state secretary to understand the requirements. Also, keep in mind if you’re filing for formation in another state – a foreign LLC - you’ll have to meet different requirements.
How to prepare your articles of organization
Yes, the articles of organization can seem daunting but it has gotten much easier over the years because of resources online (like this one) and the states themselves. The most difficult part is gathering all the required information beforehand. If that’s available then you’ll be able to finish in one sitting.
States have made it easier by providing forms that can be used. You just need to fill in the blanks with the proper information. The challenge that many entrepreneurs face is that they don’t follow the instructions to the letter. If the mistake is big enough, the articles of organization may be rejected and you’ll have to start over.
Many entrepreneurs hand off this important part of the process to qualified help. This can be your lawyer, a specialized service, or online formation platforms. The choice is yours but will be determined by how fast you need your formation and your budget.
As you may have guessed, law firms are the most expensive option but come with personalized help. Specialized services are a bit cheaper because they focus on that area and have gained proficiency.
Online formation services are the cheapest because they have fewer overhead expenses and have become incredibly efficient from doing tens of thousands of LLC formations.
One of the major benefits of online services – apart from the inexpensive price tag – is that they also offer other affordable services. These include annual report filing, registered agent services, and even website setup.
If you’re interested in this route, here are a few of our favorite LLC formation services:
ZenBusiness – ZenBusiness is one of the most popular online formation companies in the world. It starts at just $39 for the formation process and also provides auxiliary services like annual report notifications, registered agent services, and even a worry-free compliance guarantee.
Swyft Filing – This online incorporation service clocks in at $49 and has an even longer track record than ZenBusiness. It offers the baseline features you’d expect like articles of organization, and registered agent service. It also provides a 60-day money-back guarantee.
MyCorporation – Starting at $124, MyCorporation is a solid online LLC formation organization. It provides an annual report service, a simple business name search, and a robust learning center for clients. It stands out with its MaintainMyBiz service which helps you do many things like prepare meeting minutes, get a corporate seal, prepare DBA filings, dissolution paperwork, etc.
Northwest Registered Agent – This incorporation service is a bit more expensive than comparable ones but it does bring a lot to the table. As the name suggests, it offers registered agent services, foreign LLC registration, ongoing compliance, corporate guides, a virtual office, VOIP number, and mail forwarding. It starts at $225 for LLC formation.
The articles of organization for an LLC are important but they’re not too difficult to create and file. Most states provide a simple form that can be completed in a single sitting. If you’re strapped for time, be sure to consider using one of the inexpensive LLC formation services online. They’ll make sure you take the right steps without spending a small fortune in legal fees.