Limited Liability Company Articles of Organization/More Info


Limited Liability Company Articles of Organization 
Additional Information
 
The Articles of Organization, entitled the Certificate of Formation in Delaware, Mississippi, Hew Hampshire, New Jersey and Washington and the Certificate of Organization in Massachusetts and Pennsylvania, is used by an individual forming a new limited liability company in the organizer's state of choice.  This state will typically be the organizer's state of residence and principal place of business, unlike the choice made to form a corporation.  The sample Articles provided in this program can be used in all states and the District of Columbia. 

Included with this document is advice on the law of each state on various matters.  This information is extracted from statutes and case law in each state, and is general only.  Consult with your local Secretary of State to confirm you have met all the requirements before filing. 
 
Each state has its own requirements for limited liability companies.  Although the Articles provided in Business Attorney are valid for all states and the District of Columbia, check with your chosen state or an attorney before filing.  The contact information, including web site address, for each state is included below. 

Picking the State

When forming a limited liability company, the first thing to determine is where you want to form your limited liability company.  You are not required to form it in the state where you reside - you may select another state, even though you do not live there.  Most states permit a limited liability company to be organized and maintained by one person.  The exceptions are the District of Columbia, Florida, Massachusetts, New Jersey, South Dakota and Tennessee which require two members to organize and maintain it and California which only requires one member to organize but two members to maintain it.  Also, the limited liability company laws of all states and the District of Columbia have substantial similarities.  For these reasons, the limited liability company especially appeals to the single individual who desires certain benefits of incorporation, such as limited liability, but in a structure that is less formal than incorporation. These individuals usually find it more convenient to form their limited liability company in the state where they live and do business. However, in all states and the District of Columbia a member of a limited liability company can be a natural person or a business entity. 

Another factor that may impact the decision of some members as to where to organize is the historical choices most corporations have made as to where to incorporate.   Most corporations have chosen to incorporate in Delaware, followed by Nevada, because those states have historically enacted laws and rendered case decisions favorable to corporations that chose to incorporate in those states.  However, the limited liability company is a recent phenomenon as a business entity coming into existence only in recent years.   As such, this form of business entity does not have the significant history of case decisions in the Appellate courts of the states, as do court decisions involving corporations, from which one could predict how a given state would rule on some issues affecting limited liability companies.  However, a prediction of a state's policy based upon its corporation decisions would be reasonable - i.e. Delaware's high court as been favorable and predictable to the interests of its corporations.   

The reasons for picking a state to incorporate or to form a limited liability company are substantially different.  If you organize your limited liability company in another state you will need to register in your state as a foreign limited liability company.  This decision will cause you to incur additional fees and probably extra taxes.  Consulting with an attorney is always advisable. 

Two of the most important factors to consider when selecting which state to organize the limited liability company are whether other states will recognize it if necessary and how it will be taxed.  With regard to federal taxation, limited liability companies with two or more members are treated as partnerships for federal tax purposes.  Limited liability companies with only one member are reported on the owner's federal tax return as a disregarded entity and treated as a sole proprietorship.  With regard to state taxation, limited liability companies are classified in the same manner as they are for federal income tax purposes.  State level taxation is based on the federal taxation entity classification in all states and the District of Columbia (two member states are taxed as partnerships), except for Florida, Pennsylvania and Texas.  In Pennsylvania and Texas they are taxed as corporations and in Florida they are classified and taxed as corporations where they are subject to a 5.5 percent artificial entity tax.  Be aware that if you plan to do business in more than one state be sure to include more than one member when you organize if there is a possibility that you will subsequently desire to do business in a state that requires at least two members to maintain a limited liability company. 

Naming the Limited Liability Company

The next step is to choose the name of your limited liability company.  You cannot choose just any name.  The name that you select must be approved by the state in which you organize your limited liability company.  This ensures that the state doesn't have duplicate or confusingly similar names.  The state will also refuse to authorize your limited liability company if your proposed name may be deceptive to the public.  For example, if your limited liability company involves a greeting card business, you probably cannot use the name " Hallmarker Limited Liability Company.  Also, your name must clearly identify the entity as a limited liability company.  State specific information, including web sites for all of the states and the District of Columbia, are listed at the end of this discussion.  The information provided below also includes those name abbreviations that are acceptable to use in the name of your limited liability company and to include in the Articles of Organization.  You can usually search for the availability of the name you want through the Internet at the state web sites listed below.  If not, you can call the chosen state and request name availability.  All states and the District of Columbia permit the use of the words "Limited Liability Company" in your name or one of the approved names and abbreviations listed below.  

Authorizing Certificates 

The next step is to determine how many Management Certificates representing equity interest in the limited liability company will be needed.  Such Management Certificates must be signed by all the Members.  All Management Certificates must be consecutively numbered or otherwise identified.  The name and address of the Member to whom the Management Certificates are issued, with the Capital Contribution and the date of issue, must be entered in the Certificate Register of the Limited Liability Company.  In case of a lost, destroyed or mutilated Management Certificate, a new one may be issued upon such terms and indemnity to the Limited Liability Company as the Members may prescribe. 

Registered Agent

You will also need to designate a registered agent for the limited liability company.  This is a person or a business entity that resides in the state where the limited liability company is formed and is available to accept service of formal letters, notices and summonses.  If you are not a resident of the state where the limited liability company will be organized, or if no one is available to serve as registered agent, you can hire a business entity to act as your resident agent.  For example, CT Corporation System has offices in all 50 states and the District of Columbia to act as the registered office for limited liability companies.  The web site for CT Corporation System is <http://www.ctadvantage.com/Public/default.asp>.  These companies charge a fee for serving as your registered office.  A Consent to Appointment as Registered Agent form is included in the Corporate Category of Business Attorney. 

Secretaries of State 

Documents should be titled "Articles of Incorporation" or "Certificate of Incorporation" (there is no difference other than the title).  Business Attorney recommends that you confirm which is required in your State by contacting your local Secretary of State.   

Many state offices will provide "fill in the blank" forms for incorporating.  These forms can often be downloaded from their website.  In addition, many states provide downloadable online business guides setting forth all necessary information about organizing a limited liability company in the chosen state.  This option is particularly helpful and is encouraged. 

Members and Managers

The Articles of Organization document identifying Members and/or Managers provided in Business Attorney can be used in every state and the District of Columbia.  
 
Additional Documents

The Operating Agreement is required by all 50 states and the District of Columbia.  A uniform document for this purpose is also provided in the Corporate Category of Business Attorney. 

Other useful information about starting a limited liability company in your state can be obtained at the National Association of Secretaries of State (http://www.nass.org) which provides access to Secretaries of State for the various states and the District of Columbia and the Limited Liability Company Reporter (http://www.llc-reporter.com/resource.htm).