What Is an Articles of Organization Form?
Starting up a business is expected to take time as the owners are expected to finalize significant decisions that will affect the company’s position in the long run. An article of organization form serves as a physical indication of the owners’ decision to register the business as a limited liability company or LLC. This document is also referred to as a certificate of organization or formation in some states. The form is an outline of the statements that are required to form an LLC. More importantly, filing this form legally registers and identifies the business entity as an LLC in the state.
How Do You Create an Articles of Organization Form?
The demand for certificates of organization steadily rises because of the popularity of the limited liability company’s set up among business owners. This set up became the preferred choice because of its flexibility. It combines several features of a partnership or sole ownership and a corporation. It is important to note that business owners choose this set up because of taxation reasons. Case in point, it separates and ultimately protects the assets of the owners from the company’s debts and other liabilities. Here are some steps that you can follow when filing for your LLC registration.
1. Be Careful of the Name
When it comes to business names, you need to take note of both the legal and trade name of the venture. What the form requires is the business’ legal name or its official name that appears in government forms and documents. On the other hand, some companies have a trade name. The article of organization requires a business name that pertains to the legal name of the business. A well-established example is a global brand, McDonald’s. McDonald’s is the company’s trade name, and its registered business name is McDonald’s Corporation. Thus, following this example, the document must reflect the name McDonald’s Corporation.
2. Describe the Nature of the Business
With the knowledge that the document is an outline of the requirements to establish an LLC, it is imperative to include an accurate description of the business’ nature. The nature of business refers to the category of commerce sector that your business belongs in. For this form, you must indicate the purpose of the corporation along with its North American Industry Classification System (NAICS) code, which is used to classify the different registered establishments in the country.
3. Identify the Point Persons
An article of corporation identifies critical individuals that are vital for the corporation. These individuals are the director and the corporator. The director is the designated leader of the corporation; this person is at the helm of the business. The form requires the complete name and accurate mailing address of the appointed director. The same directive is extended to the designated corporator of the company.
4. Indicate the Share of Stocks
It is common knowledge that several people share ownership over a corporation. Thus, it is impossible to create a framework of how corporations work without tackling the shares of stocks. It is an essential part of the entire corporation ordeal—to share the benefits from the company and to shield from debts and other liabilities. As for this document, you only need to disclose the type of stock that will be shared among the different stakeholders. It also asks for the number of the available sharable stocks. To fill this part of the document, make sure to come up with an amenable arrangement among all the owners.
5. Review the Facts of the Arrangement
An article of corporation is easily a one-page document, but it contains several crucial information that can compromise the registration of the company when not appropriately filed. So, before you skim through and fill up the document in one go, make sure to review all the details that will reflect on the form. Check the names, primarily if you provided the legal name of the business and not the trade name.
Do nonprofit organizations require an article of organization?
Yes, nonprofit organizations require this document because it is necessary for its registration. Filing the document usually goes together with a payment for a separate filing fee.
Is the article of organization the business license?
No, a business license is a completely different document. A business license is a permit from the government that allows the business to operate. On the other hand, the article of the organization registers the business as an official enterprise in the state.
How is an article of organization different from an article of incorporation?
The main difference lies in the purpose of the document. An article of incorporation is for creating a corporation while an article of the organization is for LLCs.
Can I file an article of organization online?
Several states offer an online filing and application for the article of organization of their LLCs. One of the pioneering states that allow this process is California.
Can I change the stipulations of the article?
A simple document such as this article of organization rarely gets amended but if necessary, you can file for an amendment and pay the subsequent fee.
One of the most challenging decisions that owners make for their business is deciding for their business ownership. Apart from sole proprietorships, owners weigh the pros and cons of other types of ownerships. More often than not, the limited liability company set-up wins over the others because of the security it provides for the assets of the owners. So, if you are looking into registering your business as an LLC, make sure to know and understand the know-how of an article of corporation document.