For entrepreneurs thinking about starting their own business, forming an LLC is an ideal option, as such an entity provides the owners protection from lawsuits, business debts and other business indiscretions. However, in order to obtain that protection, there are a number of documents that the business owner or owners must file with the state government prior to conducting business. Some key documents include:
Articles of Organization
Though it’s a simple document, the Articles of Organization is the legal foundation of an LLC. Prior to filing, however, one must choose the name of the business entity and register it with the state in which it will be conducting business. If the LLC will be conducting business in other states than in which it was organized, the owner or owners must file within those additional states as well. As previously stated, the form is simple, and requires the business’s name, address and the names of the members who will be participated in business ownership. Additionally, it will require the details of any agents the owners authorize to accept legal documents on the business’s behalf.
LLC Operating Agreement
Once the Articles of Organization has been filed, the owners must file an operating agreement. This document structures the LLC’s processes for doing things and details how to proceed under certain circumstances. This includes detailing how shares should be dealt with in the event of an owners passing or leaving the business. The operating agreement should also detail how much responsibility each owner will have, as well as what their duties and powers should be.
Finally, the operating agreement should outline how profits and losses should be distributed and succession planning guidelines.
Once members sign the operating agreement, it becomes an active and binding contract. If terms are not upheld, the member in violation can be held legally accountable. Because of this, it is recommended that an operating agreement be put together prior to conducting business.
To obtain the documents needed to form an LLC, contact GovDoc here.