According to Investopedia, articles of organization are part of the legal documentation for a business filing to be incorporated at the state level. Limited liability companies (LLCs) utilize articles of organization as part of their filing process. Depending on the industry that the business is operating in, its articles of organization may vary. Some jurisdictions require that an LLC meet specific legal criteria within their articles of organization for certain industries.
When a business files its articles of organization with the state, it becomes a registered company. On receiving approval of its filing, the enterprise is said to be "domiciled" in that state. This statement means that the business counts the state as its "home" state. A company doesn't necessarily have to have a presence in the state it's domiciled. Some firms file their articles of organization in states where they have no physical presence. In such a case, they may utilize a third-party service to register the business and serve as a point of contact.
Why Are Articles of Organization Necessary?
When a business starts operating with a state, it's up to the state registrar to know what that company does and who's in charge. At the very least, the registrar must be informed of the company's directors and management or someone in authority that the state can contact the business through. The filing serves to protect the state's residents that may do business with the company in question. States have laws that govern the operation of companies within their jurisdiction. Registration of an LLC allows the state to control and regulate the business's operation within the confines of the law. The information contained with a business filing is typically available as a matter of public records. If the public wants to see who's running a particular company, they have the right to do so.
Information That Articles of Organization Contain
Articles of organization contain several pertinent bits of data that may be instrumental in communicating with a company or its directors. Among these data points are:
- Name of the Company: The company name needs to be unique since it will be how the legal documents addressed to the business will refer to the entity.
- Statement of Purpose: As Corpnet mentions, some states don't require the purpose of the business to be clearly defined during its filing, leaving a lot of room for change later down [https://www.corpnet.com/blog/what-are-articles-of-organization/].
- Physical Address: This should be the location of the company's business within the state. Some exceptions may apply when it comes to using a registered agent to handle correspondence.
- Mailing Address: Similar to above and self-explanatory.
- Management Structure: Will the managers or the members of the LLC operate the business?
- Duration: Some businesses may be registered to dissolve at a particular end date or at the conclusion of a specific project. Most LLCs are registered in perpetuity, operating for an indefinite amount of time.
- Registered Agent: The business's registered agent is also supposed to be stated on the articles of organization.
How Do Articles of Organization Differ From Articles of Incorporation?
Articles of incorporation are a similar document to the articles of organization. The articles of incorporation are also known as a corporate charter, serve as a public document, and are an essential part of legalizing the corporation's formation. Articles of incorporation are used to form a corporation, while articles of organization deal solely with the formation of an LLC. Articles of organization and incorporation may seem similar at first glance. However, three registered agents are required for articles of incorporation, while one will do if you're filing articles of organization.
Cost Of Filing the Articles of Organization
Most states institute a filing fee for filing articles of organization. Each state has its own costs, and these may vary widely. The cheapest filings can be done for as little as $50, while more expensive states require $500 to file their business documents. If the business is in a hurry to get started, the state may offer to expedite the processing for an additional fee. While it's not strictly necessary to pay the expedited fee, it may be worth it in most cases.
How to File Articles of Organization
Preparing the documents is the majority of the work involved in filing articles of organization. Some states offer handy templates that just require the owners to fill in the blanks to get their paperwork filed. It may be necessary to contract a lawyer to help draft detailed articles of organization in other cases. This step might be required if the company is unique in its operation or requires specific dissolution rules. Once the document is completed, you can submit it to the relevant state authority and pay the processing fees to get the process started. The articles of organization will then be examined by the state board and approval granted, or the articles rejected.
Reasons a State May Reject Articles of Incorporation
The state has several reasons to decide a business isn't suitable for formation within its borders. Among these are:
- Statutory formalities aren't met: If a business owner attempts to craft their own articles of organization without paying attention to the legalities of what must be contained in them, the state will reject the application.
- Non-payment of filing fees: Failing to pay the filing fees (or submitting a check that bounced etc.) would force the board to reject the application.
- Too Similar in name to another LLC: The name of the LLC must be unique and should not come close enough to infringe on another registered business's name.
- Naming conventions not met: If the business refuses to follow the naming conventions for firms within the state, the company will not be approved.
- Incomplete or unreadable information: If the submitted information isn't readable or is incomplete, you may have your application denied as a result.
Can a Lawyer Help with Articles of Organization?
Typically, if a lawyer is working on your articles of organization, you're sure it'll conform to the legal requirements that the articles should obey. From naming conventions to customized clauses within the papers, a lawyer can handle each of these in keeping with the spirit of the articles. Even hiring a lawyer to check over your template before filing can be extremely useful in helping the business get approval from the state board. While it's not necessary to involve a lawyer, it would potentially save time and money to do so.