Many small businesses choose to form an LLC, limited liability company, to keep their business organized. Registering a business as an limited liability company offers liability protection and pass-through tax status making it an affordable option for all small businesses.
LLC Registration Guidelines
There are specific guidelines designed by each state to register a business as a LLC. However all states follow the same general principles. Regardless to the method you choose to register your business or where your business is formed as an LLC, you will be required to fill out two specific documents to legalize your business as an LLC:
- Articles of Organization
- Operating Agreement
Articles of Organization
Articles of Organization is the legal foundation of the LLC. This document starts the process of becoming and limited liability company. Once you have named and registered your business with your state you will then be required to file this form, it is an requirement with all states.
This form includes basic business information:
- Member names for partnerships
- Details of the registered agent that your business has authorized to accept legal documents, such as your attorney.
The operating agreement is an important document, it is not required by all state yet recommended to businesses with more than one member. This document helps to structure your LLC’s financial and decisions on how your business functions, as well as putting in place cretain rules and regulations to ensure that your business operates smoothly.
This document determines:
- how business decisions are made
- member’s duties
- member’s powers
- member’s responsibilities
- outlines how profits and losses will be distributed
- how and when meetings will take place
- succession planning (procedures for buying out or transferring ownership interests when members leave the LLC)
The operating agreement is a binding document for all members of the LCC, once signed it becomes a legal contract.
While you can write these documents on your own it is recommended to use the assistance of an qualified small business attorney. This attorney will be able to assist you in the preparation and submission of these documents, ensuring that your business is properly registered and documented as an LLC. Another option for writing these documents is using an online service provider to help with all areas of filing these documents and creating an LLC.