Legal Documents You Need to Officially File Your Business

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• How to File the LLC Articles of Organization
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Understanding Articles of Organization and Incorporation

Articles of Organization and Incorporation are vital legal documents filed with a government body to formally establish a business. Learn their differences, contents, and how to create them for your company.

Legal Documents You Need to Officially File Your Business – Transcript

Separating your personal assets from your business assets is one of the most important benefits of officially filing your business. But to do that effectively, you'll need to have the right legal documents in place, which is exactly what we'll be talking about in this video.

Hey everybody, Will Scheren here from Small Business Startup Guide by TRUiC. This video is part of a larger course dedicated to helping small business owners cut through the noise and get to the essentials of starting and operating their business. If that sounds like it would be really useful to you, be sure to like and subscribe. 

After having discussions surrounding how the ownership of the company you're forming will be divided, finding an accountant and a lawyer to help you through the formation process, and deciding the type of business formation that you will file your company asks, you’ll want to quickly turn your attention to getting Articles of Organization or Incorporation and an operating agreement put together. So that you can legitimize your business, define ownership and separate your owners' assets from your business’s. 

What are Articles of Organization and Articles of Incorporation? Articles of Organization and Articles of Incorporation are a set of legal documents filed with a government body, and they legally document the forming of a business. 

These documents are similar filings with one primary difference. Articles of Incorporation are for companies looking to form a corporation. Well, Articles of Organization are for limited liability companies. Both documents are used to formally form a business when filing for an EIN number and generally contain pertinent information such as the company's name, street address, and the registered agent of the company. 

How do you create Articles of Organization or Incorporation for your company? Below this video, we provided a template for you to outline the items that you would need when filing for Articles of Organization or Incorporation for your company. Download these and work through them before meeting with a lawyer to file your company. 

Keep in mind that the Articles of Organization template should be used if you've been recommended by your accountant to form an LLC, and the Articles of Incorporation template should be used if you're filing as a corporation. 

What is an operating agreement? An LLC operating agreement is a document that customizes the terms of a limited liability company according to the specific needs of its members. It also outlines the financial and functional decision-making in a structured manner. Companies filing as a corporation rather than an LLC do not need to make operating agreements. 

Although writing an operating agreement is not a mandatory requirement for most states, it is nonetheless a crucial document that should be completed when setting up a limited liability company. And we strongly suggest that you have your lawyer draft one for any company that you're starting. All of the states that you see listed here require LLCs to have operating agreements. 

Benefits of operating agreements – even if a business owner only has a single owner, it can still be beneficial to codify the relationship with a formal LLC operating agreement. Having an operating agreement establishes a legal boundary between the business and its owner so that the owner is not held accountable for the LLCs debts or liabilities. Otherwise, creditors to the LLC may pursue the business owner's personal assets. 

An operating agreement also allows the owner to codify the rules of succession for the business, as well as governance procedures such as meetings and voting. Without an operating agreement, ownership of a business is handled according to a state's default LLC rules. 

What is included in an operating agreement? There is not a one size fits all way to create an operating agreement, and since the agreement will be a legal document and every business will have unique aspects that needs to be discussed within the document, we strongly suggest getting this document for your business drafted by a lawyer. But to streamline your communication with your lawyer, you should proactively compile some information. 

Generally, the format of operating agreements includes the following: each member's ownership expressed as a percentage, the members' responsibilities and voting rights, a layout of the duties and powers of members, the profit and loss allocation among members, the rules related to holding meetings and taking votes, the issues related to the management of the LLC, and buyout and buy-sell provisions, which is when a member wants to leave and sell their shares. These also include what would happen in the event of a member's death. 

We provided a link below this video for you to download an operating agreement template for a single-member LLC, a member-managed multi-member LLC, and a manager-managed multi-member LLC. You can use these to prepare 88 for discussions with your lawyer surrounding creating an operating agreement for your LLC. 

After working with a lawyer to put together the needed documents to separate your personal assets from the business that you're creating, you'll be ready to take the final step in forming your business, which will be filing the necessary papers to get an iron for your business. And we'll be discussing how to do exactly that in the next video in the course. 

This video is part of a step-by-step course that gives business owners all of the essential information for starting and operating their business. We've provided a link below this video that gives you access to all of the free and discounted business tools that we mentioned in this course. 

Be sure to like and subscribe to get more of this content. We’ll see you in the next video, and if you have any questions, let us know.