Articles of organization are foundational legal documents when starting a new business which is an LLC. They are the basis for establishing a business entity in the form of a limited liability company, or LLC, in any given state in the US.
Every US state requires business owners who want to form an LLC to file articles of incorporation, but the requirements for what to include and how to submit them vary from place to place.
What are articles of organization?
Articles of organization set out legal rights, capabilities, fiduciary duties, potential liabilities, and other official aspects of the relationship between each member of an LLC, as well as between members and the LLC itself.
You file articles of organization with your state government. An LLC must meet specific requirements set forth by the individual state authority in the area where it will do business. There may also be industry-specific regulations imposed on certain LLCs, like those in food service, health care, or child care.
What’s included in the articles of organization?
All articles of organization filings require basic information about the company, such as:
- The name and address of the business (i.e., its principal place of business).
- The names and addresses of the members, managers, and directors of the LLC.
- A statement of the nature of the LLC’s business, or its purpose. This can usually be broad, along the lines of “to engage in any lawful activity.” (This maximizes business flexibility if, for example, you run a clothing company but later decide to start selling home goods as well.)
- The name and address of the LLC’s registered agent. This is the person authorized to accept delivery of legal materials on behalf of the LLC, such as tax documents, a lawsuit, or a subpoena. Some states, such as California, offer registered agent services for this purpose.
Many states offer templated forms to help you draft proper filings. If you live in such a state, it’s important to follow the instructions on these forms closely to ensure your filing is accepted.
State rules for filing the articles of organization
Articles of organization are reviewed by the filing state’s secretary of state or corporate registrar. While many filing states share similarities in their review process for articles of organization, technically speaking, each individual state maintains its own set of rules and requirements.
Here are a few examples of just how particular state authorities can get, highlighting why it’s important you carefully review your local rules before filing:
- Naming. In most states, the company name must indicate that it is an LLC. But even here there are state-by-state distinctions: In Oklahoma, for example, the LLC identifier can be abbreviated (“LLC” at the end of the name); in Kentucky, it must be fully spelled out (“Limited Liability Company”).
- Periodic reports. Most states require LLCs to file periodic reports with the appropriate regulatory agency. But requirements vary by location. California, Iowa, and Indiana require biennial reporting, for example; Pennsylvania requires a report only once per decade.
- Filing fee. Some states require special fees, in addition to overall filing fees, paid to certain agencies when filing articles of organization. For example, in California, you must pay the franchise tax fee; in West Virginia, you must pay the state tax department; Connecticut LLCs must pay a biennial business entity tax in years ending with an odd number.
- Management. Who will manage your LLCs? Some states require you to clarify in your filing whether your LLC is “member managed” (managed by all or some of the LLC members) or “manager managed” (managed by a third party hired by the members). Rhode Island and New Mexico are two such states. In most states, LLCs are designated member-managed by default.
- Notice. Sometimes, a little pomp and circumstance is necessary. In Nebraska, filers of articles of organization must publish a “notice of formation” in one newspaper for three consecutive weeks.
- Certification. Some states—like Massachusetts, New Jersey, Iowa, and Mississippi—require that you file a “certificate of organization” prior to filing articles of organization.
- Operating agreements. New Hampshire, North Carolina, Idaho, and South Dakota do not require you to create an operating agreement—a document reflecting the functional and financial operations of the company—with your articles. States that require filing an operating agreement include New York, California, and Missouri.
If you are ready to file your articles of organization, here are a few final details to note:
- While it is not required to retain an attorney to file your articles, because of the particularities of each state, an attorney licensed in your place of business will have a good understanding of any unique requirements.
- Articles of organization do not suffice as a business license—you will need to apply for this separately.
- Articles of organization are public record in all states. Be aware of this, and don’t include anything in your filing that you don’t wish to be public knowledge.