Certificate of organization vs articles of organization

What Are Articles of Organization?

Articles of organization are part of a formal legal document used to establish a limited liability company (LLC) at the state level. The materials are also used to create the rights, powers, duties, liabilities, and other obligations between each member of an LLC and also between the LLC and its members.

The state also requires businesses to pay a fee when it files articles of organization. Articles of organization are similar to articles of incorporation and are sometimes referred to as a "certificate of organization" or a "certificate of formation."

Key Takeaways

• Articles of organization are used to establish a limited liability company (LLC) at the state level.
• The articles of organization can also help establish the rights, powers, duties, liabilities and other obligations between each member of an LLC in the bylaws.
• Filing requirements for articles of organization may vary slightly from state to state.
• Articles of organization may be called "articles of association" in other countries besides the United States.

Understanding Articles of Organization

Articles of organization are filed with a state government, but many counties and cities also have their own business licensing and zoning requirements. Each LLC must meet the specific requirements for the area in which it will do business. Some industries, most notably food service and child care, are more heavily regulated than others.

Rather than having to write articles of organization from scratch, many states have fill-in-the-blank forms for filling out and filing articles of organization. For example, the Articles of Organization form from the New York State Division of Corporations, State Records, and Uniform Commercial Code comes in a handy two-page format and is available online. The filing fee is $200 in New York.

According to New York regulations, an LLC's operating agreement may be entered into before, at the time of, or within 90 days after the filing of the articles of organization. Although all articles of organization generally require the same basic information, requirements may vary slightly from state to state. Many filers of articles of organization hire lawyers to assist them with the process.

Required Information to File Articles of Organization

All articles of organization filings tend to require basic information about the company's business name and address, the names and addresses of members of the LLC, the names and addresses of its managers, organizers, and directors, and the name of the business's registered agent, and a statement of the business purpose. Information required can include the following:

• The LLC's name and address (its principal place of business)
• The nature of the LLC's business, sometimes broadly stated as "to engage in any lawful activity" for greater flexibility
• The name and address of the LLC's registered agent, which is the person authorized to accept delivery of legal documents on behalf of the LLC
• The names of the members, managers, and directors of the LLC

The articles of organization are reviewed by the filing state's company registrar or secretary of state. Once approved, the articles of organization become the legal basis for the creation of an LLC as a registered business entity, and LLCs are then bound by the state laws under which they were formed. In effect, the articles of organization act as a charter.

Source: FundsNet.

How to File Articles of Organization

There are four primary steps in filing articles of organization. These are (1) visiting the Secretary of State Website, (2) gathering your information, (3) preparing to answer questions, and (4) submitting the form.

Visiting the Secretary of State Website

You will need to head to the specific website for your state. There you will find instructions on how to file the form for the articles of organization, whether you can file online or not, and the cost of filing. There may be additional information laid out specific to your state that you will need to comply with.

Gathering Your Information

To make the process as simple as possible while you are filling out the form, gather all the information you may need beforehand, which has been discussed above. Make sure to have the LLC name, address, and registered agent.

Answer Questions

Depending on the state you file in, you may have to answer various questions when filing. As before, make sure you have all possible information on hand. Questions that may be asked include the purpose of your LLC, the manager or group members of the LLC, and information related to the members.

Submit the Form

The last step is to submit the form. Depending on the state, this will be done either online or via physical mail. Double check that all of your information is correct before submitting.

What to Do After Filing

After filing, you can still be active in the business creation process. Here are a few steps you can take:

Obtain an EIN

An employer identification number (EIN) is a nine-digit number that the IRS gives companies for tax purposes. You will need an EIN to open a business banking account, get a business license, and file taxes for your business.

Create an Operating Agreement

While an operating agreement for your company is not required, it is certainly recommended to make sure your business always runs efficiently. An operating agreement will contain all important information, such as the responsibilities of members, succession plans, member titles, contribution requirements, and so on.

Open a Bank Account

You can open a bank account specifically for your business which is a prudent move as it separates business finances from your personal finances and makes reporting and budgeting much easier. In general, this allows for ease of tracking, expense reporting, and filing taxes.

Get Your Business License

Obtaining your business license will ensure you are compliant with all requirements of your state laws. You will need to apply for a license with your state to get one.

What Does an Article of Organization Do?

An article of organization is required by states to create an LLC and contain information regarding the business. It lists the business name, type of business, the members, and purpose of the business. It can also be used in creating the company's bylaws.

How Do You Write an Article of Organization?

States will have a form available on their websites to help you create an article or organization, preventing you from having to create a completely new one from scratch. Common information that will need to be included in the article of organization includes the name and address of the registered agent and company registrar, the main location of doing business, the type of business, the name of the company, and the purpose of the business.

Do I Need an Article of Organization?

If you are planning on creating an LLC, yes, all states will require you to have an article of organization. An article of organization will lay out the basic information of your LLC and will be filed with the Secretary of State's office. Each state will have its own requirements on the Secretary of State's website with a form you can fill out.

The Bottom Line

An article of organization is an important document in the creation of an LLC. It is also used to create the rights, powers, duties, liabilities, and other obligations between each member of an LLC and also between the LLC and its members.

What is the difference between a certificate of organization and articles of organization?

Is certificate of formation the same as articles?

What is an organization certificate?

What is the difference between article of incorporation and organization?