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Accounting and Tax Tips Blog

Articles of organization play an important role in how you formally set up your business. This document outlines your business’s fundamental information and registers it with the state. You must file one of these documents anytime you set up a new business entity, but you should take some things into consideration before you get started. 

What are the Articles of Organization?

New limited liability companies must file articles of organization with their home state. These documents outline important information about your business, like its name, structure, and address. They also include contact information for the business’s registered agent and other details. 

What is the Difference Between Articles of Organization and Articles of Incorporation

Articles of incorporation are the corporate version of the LLC articles of organization. Also known as a corporate charter, articles of incorporation formally register a business as a corporate entity. Both documents include very similar information, but they go by different names based on the kind of entity they establish. LLCs use articles of organization, and corporations use articles of incorporation.

Articles of Incorporation

You must file a corporate charter to form an S-corp or C-corp. These documents outline the new corporation’s basic information and may also include additional info for tax purposes.

Articles of Organization

Many business owners prefer LLCs over corporate structures because of their pass-through taxation. It’s also much easier to keep up with an LLC’s less rigid filing requirements. When you establish your LLC, you must file articles of organization with the state. This document also outlines the business’s name, address, and registered agent.  

What to Include in Your Articles of Organization:

Changing your articles is much more complicated after they’re filed, so it’s best to get it right the first time. Make sure you consider these details before you fill this important form.  

Ownership Interests

If you have more than one business owner, you should outline who owns the business and how much interest they hold. 

Registered Agent

Your articles must include contact information for your business’s official legal representative. This person is responsible for receiving lawsuits and state correspondence on behalf of your business. Your registered agent must have a reliable mailing address and keep regular business hours. You can list yourself as the registered agent, but some business owners prefer not to list their personal info publically. If privacy is a concern, you can opt for a company that offers registered agent services for a yearly fee.  

Effective Date and Duration

You must list the effective date of the LLC when you submit your articles. All parties must agree on this predetermined date. LLCs don’t typically expire, but you can elect to have your LLC automatically dissolve on a preset date.  

Home State

Your home state is the state where your business primarily functions. You can choose to form your LLC in any state, but you should consider all the factors. Some states offer stronger liability protection than others, and formation costs can also differ. You can choose any state you want as long as you have a registered agent based in the state. 

Articles of Organization vs Operating Agreement

The articles register your company as a legal entity, but you have to draw up some more documents before you’re done. Your operating agreement is one of the most important documents involved in forming an LLC because it lays out the terms under which your LLC will operate. It includes important information about ownership roles, member dispute resolution, and much more. You should consult with a qualified professional to ensure your operating agreement is up to snuff.

Tax Planning for Your New LLC

Tax planning is an important part of running any business, so you should take it into consideration whenever you consider changing your business’s legal structure. We’re not attornies, so we can’t tell you if an LLC is right for you, but we can explain any tax implications that will stem from the decision. Get started today with a one-on-one strategy session with a Shared Economy Tax pro. You can also sign up for our complimentary tax tips newsletter using the form below.