If you want to form your own limited liability company (LLC), one of the first formal steps you’ll need to take is to file a special document with a particular state office. In most states, the document is known as the articles of organization, and in most states it needs to be filed with the Secretary of State. However, your particular state may have a different name for the document (“certificate of formation”) or a different state office where it needs to be filed (in Maryland, the State Department of Assessments and Taxation; in Arizona, the Arizona Corporation Commission). Let’s take a quick look at the details of this relatively simple form.
While there are variations among the states, each of the following pieces of information commonly must be included in articles of organization:
- the name of your LLC
- the name and address of your LLC’s registered agent
- a statement of the LLC’s purpose
- an indication of how the LLC will be managed
- the address of the LLC’s principal place of business
- the LLC’s duration; and
- one or more authorized signatures.
LLC Name. Providing the name of the LLC may seem simple. However, you must make sure that the name you provide doesn’t conflict with the name of a preexisting business that’s already registered in your state. For example, if you submit articles of organization for an LLC named Houdini Linguini, LLC, and there is already a Houdini Linguini Corporation in your state, your filing will be rejected. To avoid rejection, you will need to do a search of business names already registered in your state. This is typically a simple process that you can do online through your Secretary of State’s website.
Registered Agent. A registered agent is someone who you designate to receive official papers for the LLC. These may include renewal notices and other communications from the state—and certainly would include documents related to lawsuits. The registered agent must be located in the state where your LLC is organized and you must provide a physical—street—address for the agent. In many cases, a member of your LLC will serve as the registered agent, and the address will be the LLC’s business location. In other cases, you may choose to appoint a separate individual, such as a lawyer, or a company to act as your registered agent. (For more information, check What is a Registered Agent.)
Statement of Purpose. Most states do not require you to be specific about the purpose of your LLC. Instead, a statement such as “The purpose of the Limited Liability Company is to engage in any lawful activity for which a Limited Liability Company may be organized in this state” is usually sufficient. One exception to this general rule arises if you are forming a professional limited liability company (PLLC), in which case you will need to be more specific about the type of professional services the PLLC will provide.
Management. LLCs can be managed either by their members or by separate managers, and most states require you to indicate which type of management will apply for your LLC. In some instances, you may also need to provide the names and addresses of managers. (For more details on LLC management, check Member-Managed LLCs Versus Manager-Managed LLCs.)
Principal Place of Business. This is simply the main location for your business. For many small businesses, it will be the one and only business location.
Duration. The duration is the length of time, in years, that your LLC will operate. Not all states ask for a duration in their articles of organization, and states that do ask for it often do not require you to be specific. Instead, the duration may simply be “perpetual.” In fact, in many states, if you do not provide a duration, it is assumed by default to be perpetual. In some states, however, there is a statutory limit on the duration of an LLC. These limits are usually several decades in length, at the end of which time, if the LLC is still in business, the term can be extended for another long period.
Authorized Signatures. States routinely require at least one organizer of the LLC to sign and date the articles of organization. If your LLC is member-managed, you’ll likely want to have all the initial members of the LLC sign the articles as an indication of participation in the business.
Preparing and filing articles of organization is only one of several steps necessary to form an LLC. You must also prepare an operating agreement for the new company, and there will likely be other initial tasks. If you want further information about articles of organization in your particular state, check the 50-State Guide to Forming an LLC. And, if you want information on making decisions and keeping minutes for your LLC, check Your Limited Liability Company: An Operating Manual, by Anthony Mancuso (Nolo). For the practical stuff, like naming your business, getting licenses and permits, raising money, and hiring employees, see Legal Guide for Starting & Running a Small Business, by Fred Steingold (Nolo).