Articles of Organization Definition

This document lists basic information regarding an LLC. Articles of Organization usually contain:

• The organizer’s information
• The business’s name
• A general statement of purpose
•  The business’s principal office 
• The name and address of the business’s registered agent
• The date the business becomes effective

A person filing the LLC paperwork (often called the organizer) must include the appropriate fee with the Articles of Organization. Once the organizer submits the LLC’s Articles of Organization and they receive approval from the appropriate state agency, the business is officially registered as an LLC. 

Other Names for Articles of Organization

Articles of Organization, by definition, are specifically for limited liability companies. This isn’t to be confused with Articles of Incorporation, which are specifically for the formation of another legal entity called a corporation. In some states, Articles of Organization are referred to as a Certificate of Formation, Articles of Formation, or Certificate of Organization. However, Articles of Organization is the most common name.

Benefits of Filing Articles of Organization with Professional Assistance

Filing Articles of Organization is mandatory to set up an LLC, and doing so improperly can preclude a business from enjoying the liability protection of an LLC. Many entrepreneurs don’t want to risk making errors during such an important step. That’s why ZenBusiness offers an LLC Formation Service to help entrepreneurs get their businesses up and running without making any costly mistakes.

An LLC business owner might also be required to amend their Articles of Organization over time when things change over time. ZenBusiness can help with that, too: they can help entrepreneurs file an individual amendment, or they also offer a Worry-Free Compliance Service, which includes up to two amendment filings per year.

Articles of Organization: Benefits of Creating an LLC

There are several advantages of Articles of Organization. First, filing the Articles of Organization is the only way to establish an LLC and obtain the liability protection that comes with it. The Articles of Organization benefit business owners because the structure subjects LLC members or managers to personal liability only in limited circumstances.

Another huge benefit comes with pass-through taxation. Corporations are double-taxed because they pay taxes at the corporate level and then again on individual shareholders’ income taxes. LLCs aren’t. With pass-through taxation, the business’s tax liability passes through to the individual owners — the business is not taxed at the entity level. This means that LLC owners will not have to deal with the disadvantages of double taxation and the reduction of dividends that are seen with corporations.

Articles of Organization vs. Operating Agreements

Creating a business can often come along with confusing terminology that can easily get things mixed up for entrepreneurs. No one wants to make the mistake of confusing optional documents with documents required by their state’s filing agency. It can waste valuable time and potentially cause a document to be rejected because it’s incomplete. 

Remember that although a business’s Articles of Organization are required by the state’s filing agency, operating agreements aren’t required in most states. An operating agreement serves a different purpose. Operating agreements can address various business topics, but they generally cover:

• Names of managing members, if any
• Capital contribution requirements
• Ownership percentages and equity distributions
• Voting rights
• Events causing dissolution of the business

Although operating agreements aren’t always required, they can be very helpful to establish clear ownership rights in an LLC with more than one member. If members of an LLC disagree on any general business practices or finance splits, they can refer to the operating agreement to settle their disputes. ZenBusiness offers an LLC operating agreement template to help entrepreneurs get started creating a unique and effective operating agreement.

Summary

Articles of Organization contain an LLC’s basic information, and the form helps to officially establish an LLC in the state. Filing this form and creating an LLC benefits an entrepreneur because the business structure provides easy filing, limited personal liability, and pass-through taxation.