Before you dive into starting your new business, there are several important LLC documents you’ll need in order to register your cpmpany.
1. Articles of Organization
The Articles of Organization are the equivalent of the corporation’s Articles of Incorporation. This document is also called a Certificate of Organization. It is the legal foundation for your LLC and is required by every state. This mandatory document outlines the basic information for your business, including:
- Business Name: It’s essential that you make sure that your name doesn’t conflict with the name of another business already registered in the state where you’re filing your LLC.
- Business Purpose: In most states, you don’t need to be specific about your purpose. A template statement like “to engage in any lawful activity under state law for a limited liability company” should be enough.
- Principal Place of Business: This simply details where you primarily conduct business.
- Registered Agent: This is the entity or individual who will receive official papers and legal documents on your behalf, including renewal notices from the state and any documents related to lawsuits. The registered agent must be located in the state where your LLC is registered and must have a physical street address. If you would rather not use your business address as the registered agent, you can use a registered agent service to handle this for you.
- Your Management Structure: Most states require that you specify your management structure. Does it include a single manager, more than one manager, or are all members managers? You may also need to provide the names and addresses of each of the managers.
- Business Duration: Not all states require you to specify how long your LLC will operate, but some will. You can opt to say “perpetual” for the duration and not give a specific end date. A few states set a statutory limit on the duration (usually a few decades). You can always extend your LLC for longer if it’s still in business when you hit the end of this period.
2. LLC Operating Agreement
An LLC Operating Agreement is the document that states the rights and obligations of the members of your LLC, as well as lists the distribution of income of the Limited Liability Company to its members.
While you’re not required to file an operating agreement to form your Limited Liability Company, you will need to keep one at your place of business to be compliant with the company’s corporate formalities.
If you’re not the only shareholder of your business, all members must sign the operating agreement in order for it to be effective and valid. If there is more than one member, you’ll need to define how key business decisions will be made, how profits and losses will be distributed, and what happens when someone wants to exit the business.
What you include in your operating agreement will vary depending on your business, but may include:
- Names of owners
- Member contributions
- Members’ percentages of ownership
- Management structure
- Member responsibilities and duties
- Voting rights
- How profits and losses will be distributed
- Options for ownership transfer
- Succession plans
- How the LLC can be dissolved
When you’re starting a business, you’re probably not thinking too far down the road, but it’s a wise idea to plan out what will happen if an owner dies or wants to exit the business.
3. IRS Form SS-4
No matter what business structure you choose, you will also need an Employee Identification Number (EIN) or Federal Tax ID. You’ll use this in place of your own social security number for all business-related documentation. You’ll also need it to open a business bank account and file your business taxes. To get an EIN, you need to fill out IRS Form SS-4 or request a company like CorpNet to do it for you.
In addition to these three LLC documents, you will need to file an annual/biennial report with the state (although a few states don’t require this).
Knowing what’s expected of you in filing an LLC can make the process go smoother.
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