The Articles of Organization for your Limited Liability Company (LLC) may need to be amended or updated periodically. Whenever information in the original Articles of Organization changes, an amendment may be necessary to ensure that the governing documents of the LLC match the current information being used by the company.
How to Update Articles of Organization in 6 Easy Steps
- Determine Whether an Update Is Necessary
- Obtain Approval for the Update as Required by the LLC’s Operating Agreement
- Complete Appropriate Government Forms to Change the Articles of Organization
- File Articles of Amendment with the Appropriate State Agency
- Pay Any Fees for the Articles of Amendment to Change an LLC’s Information
- Update Company Documents and Marketing Materials with the Changes
The laws and rules governing LLCs vary by state, so it can be helpful to seek guidance from an experienced professional if you have questions or concerns about the steps to amend the Articles of Organization.
What Are the Articles of Organization?
The Articles of Organization is the document filed to form a Limited Liability Company (LLC). Because the laws vary by state, some states refer to the form as a Certificate of Organization instead of articles.
Many states have designated official forms that must be used for the Articles of Organization for an LLC. Therefore, it is always wise to check with your Secretary of State’s office to determine whether you need to use a specific form when preparing the articles. More states now allow filing Articles of Organization electronically, which can speed up creating an LLC.
The purpose of filing Articles is to organize a Limited Liability Company formally and legally. An LLC does not legally exist until the forms are filed with and approved by the state in which the LLC is organized. All LLCs must file Articles with the state to be recognized as a legal entity, regardless of whether the LLC is a single-member LLC or multi-member LLC.
What is included in the Articles of Organization?
State laws govern the formation and existence of Limited Liability Companies and the information required in the Articles of Organization can vary by state. However, the basic information that is typically required when filing Articles of Organization for an LLC include:
- The name of the Limited Liability Company
- The principal place of business for the LLC
- The mailing address of the LLC, if different from the principal place of business
- Information, such as the names and addresses, for the LLC’s owners, officers, and managers
- The name and registered office of the Registered Agent for the LLC (the Registered Agent is the person or company authorized to accept service of legal notices and legal documents on behalf of the LLC)
- The effective start date for the LLC. If a date is not listed, the presumed state date for the LLC is typically the filing date of the Articles of Organization or the date the state approves the Articles
- A description of the LLC’s business activities
- The signatures of the LLC’s organizer or organizers and any managers listed in the Articles of Organization
Because the requirements for Articles of Organization vary by state, you should always check with your state’s Secretary of State or other agency that handles corporate filings to ensure you include all required information in the Articles and use the correct form (if the state has an authorized form for Articles of Organization). Failing to include all required information can result in a denial of the request to form an LLC. Once the document is approved, the LLC is formed, and you can begin doing business as an LLC.
How Do I Amend the Articles of Organization?
To amend an LLC’s Articles, follow these 6 steps:
1. Determine Whether an Update Is Necessary
Once an LLC’s Articles are approved, it is typically not necessary to amend the original document, except in a few cases. The reasons why an LLC might need to file Articles of Amendment include changing the name of the LLC, registering a change in membership ownership, change the name or the address of the registered agent, changing the management or financial structure of the LLC, and changing the mailing address or principal address of the LLC. Typically, changes to an LLC’s Operating Agreement are not required to be reported to the state. However, some changes could fall within the reporting requirements for an LLC.
State laws vary regarding the reasons why Articles of Amendment for an LLC need to be filed. Seeking advice from a business or legal professional is usually a wise step to take before filing amendments to the original Articles for an LLC.
2. Obtain Approval for the Update as Required by the LLC’s Operating Agreement
The LLC’s bylaws or operating agreement should dictate the approval process for changes to the LLC’s Articles of Organization. Before filing any amendments, it is important to review the operating agreement and follow all steps necessary to obtain approval from LLC members and/or managers.
It is also important to know your state laws governing Limited Liability Companies. Some state laws require that all members and/or managers of an LLC agree to the changes being made to the Articles while other states allow members of an LLC to establish their own rules and regulations for deciding who needs to approve Articles of Amendment.
3. Complete Appropriate Government Forms to Change the Articles of Organization
Review amendment rules for your state to decide when you must report amendments to the state. If you must report an amendment to the original Articles, determine whether your state has a specific form that you must use. Some states refer to the form used to change LLC information as Articles of Amendment. The form may also be referred to as a Certificate of Amendment or Certificate of Change.
It is also a good idea to double-check the amendment announcement requirements for your state. A few states require LLCs to publish notice of changes to an LLCs original Articles of Organization. An LLC that does not follow the reporting and notice requirements could face legal trouble in the future.
4. File Articles of Amendment with the Appropriate State Agency
Some states require LLCs to file Articles of Amendment within a certain time frame. Check your state’s laws and rules to determine the deadline for filing an LLCs Certificate of Amendment after changes are made to the LLCs Articles.
Most states have authorized forms they require LLCs to use when amending the Articles. The information on the forms varies by state. Typically, information required to complete Articles of Amendment includes:
- The LLCs name as it appears in the original Articles of Organization
- The date of organization
- The information being changed, such as the new name for the LLC or the change of business address
- The exact text of the Articles being changed
- The effective date and time of the change. If a date and time is not notated, the changes become effective upon the filing with the state agency
- The name and address of the LLC’s registered agent
- The signature(s) of the person(s) authorized to sign documents on behalf of the LLC. If the LLC is member-managed, the form may require the signatures of all LLC members
5. Pay Any Fees for the Articles of Amendment to Change an LLC’s Information
Review the filing fees for Articles of Amendment and include the filing fee with the amended forms. Filing fees vary by state and may change periodically, so always check the fee schedule before filing any LLC forms with the state.
6. Update Company Documents and Marketing Materials with the Changes
Depending on the changes to the LLC’s Articles of Organization, changes may need to be made to the LLC’s Operating Agreement, leases, contracts, banking information, marketing materials, and other documents and forms used by the company in its day-to-day operations. Name changes and changes to addresses typically require a great deal of work to modify documents and marketing materials to reflect the changes in the Articles of Amendment.
How Anderson Advisors Can Help
Many new business owners wonder whether they need to hire attorneys and other professionals to provide business and tax advice regarding the formation and operation of a business. While most states allow members to form an LLC without hiring an attorney, it is always advisable to seek legal counsel when forming a business entity.
Anderson Advisors provide a variety of services for entrepreneurs who want to form an LLC. We also assist individuals with matters related to operating an LLC successfully.
Some of the ways that our legal, business, and tax advisors can help you with your LLC include:
Choosing the State in Which to Organize the LLC
Because state laws governing LLCs vary, it may be beneficial for an LLC to file Articles of Organization in another state and file a request to do business in its home state. Our advisors review various state laws to determine which state is the best state for organizing the LLC.
Choosing a Name for the LLC
Choosing the best name for a Limited Liability Company can be challenging. You need a name that is not currently being used by another company or business, but that also meets all requirements for LLC names. Our advisors guide you through choosing an LLC name, performing research to ensure there are no problems associated with the LLC name, and registering to protect the LLC name for branding purposes.
Drafting, Filing, and Managing the Articles of Organization for the LLC
We take care of ensuring that your LLC is formed as a legal entity under state law. We also determine when Articles of Amendment are required and take care of preparing and filing Articles of Amendment when necessary.
We Serve as Registered Agent for LLCs
Because we are lawyers, we understand the legal issues related to process of service. We can assist your LLC as a registered agent in several ways, including accepting and filing compliance documents, accepting and filing tax documents, serving as the street address for the company, responding to service of process notifications, and assisting you in ensuring that your LLC remains in good standing.
Drafting and Managing Operating Agreements
Your LLC operating agreement sets forth the financial, management, and other rights of each member (owner) of the LLC. A detailed, comprehensive Operating Agreement can avoid legal problems in the future. The Operating Agreement covers a wide variety of matters and issues related to the ownership and operation of the LLCs, including matters related to capital contributions, how profits and losses are distributed among LLC members; management roles and duties of members, appointment of officers; voting rights, indemnification protection, restrictions on transfers of LLC interests, procedures for meetings, procedures for amending the Articles of Organization and Operating Agreement, and procedures for dissolving the LLC.
We also provide the following services:
- Obtaining necessary licenses and permits – Depending on the type of business performed by the LLC, the LLC may require several licenses and permits. Anderson Advisors can help you apply for, obtain, and maintain the necessary licenses and permits required to operate legally.
- Maintain required filings and legal requirements – An LLC may be required to file various state and federal filings each year. Failing to file these reports and documents timely could result in penalties, late fees, and dissolution of the LLC. Our advisors take care of keeping track of legal requirements and filings.
- Drafting contracts and agreements – Using contracts and agreements is essential for operating a successful business. An attorney can draft contracts and agreements that protect your business and your personal interests. Using contracts and agreements can help reduce disputes and legal problems in the future.
- Assisting with legal matters – Having an attorney on retainer means that you have access to a professional to answer questions regarding legal matters as they arise. Having an experienced legal professional you can rely upon to provide guidance, support, and answers to legal questions in real-time can help you avoid mistakes or errors that could result in costly and time-consuming litigation in the future.
What are the Benefits of Choosing a Limited Liability Company for Your Business Structure?
A Limited Liability Company or LLC offers a variety of benefits for entrepreneurs who want to create a legal entity for their business but who do not need or want to create a corporation. An LLC offers many of the benefits of a corporation without the requirements or legal formalities associated with forming and operating a corporation.
Some of the benefits of choosing an LLC for your business entity include:
- Setting up an LLC is fairly easy and affordable. The LLC Articles of Organization are easy to complete and file with the Secretary of State. In most cases, the Secretary of State’s website provides general instructions for starting an LLC, including an Articles of Organization template, required filing fee, and other LLC formation information.
- Less paperwork required to maintain the legal entity. A corporation requires stockholders and the board of directors to have an annual meeting to maintain legal status as a corporation. Corporations are also required to submit annual reports and pay annual fees to the state, whereas most states do not require the officers or members of an LLC to keep extensive records or adhere to such stringent rules to maintain the business entity.
- LLCs offer limited liability for its members. The personal liability of the LLC members is limited in that the LLC is responsible for its own obligations and debts. Members can lose money that they invest in an LLC, but creditors are not permitted to collect LLC debts from members personal assets unless the member signed a personal guarantee.
- There are also certain tax advantages of operating an LLC. Corporations must file annual tax returns and pay taxes on corporate profits. An LLC may be operated as a pass-through entity or disregarded entity for tax purposes. A single-member LLC is taxed the same way as a sole proprietorship. Multi-member LLCs are taxed as partnerships.
- LLCs do not have the same ownership restrictions as an S Corporation. Companies, individuals, trusts, pension plans, and foreign entities can be members of an LLC. There are no limits on the number of members who can own an interest in the LLC. Some states require that an LLC identify the members while other states do not impose this requirement on the business entity.
- Corporations have very formal management structures that require establishing a board of directors and electing officers. A Limited Liability Company has more flexibility in its management structure. LLC members choose the management structure that best suits their needs and goals for managing the LLC.
- Corporations also have strict rules for distributing profits to shareholders based on the type and number of shares each individual or entity owns. However, an LLC has a much more flexible structure for distributing profits from the business. The LLC operating agreement dictates how profits and losses are divided among the members, but members choose the structure and terms for distributing profits and losses when they develop the operating agreement.
Even though an LLC has many advantages over a corporation as a business entity, there are some disadvantages of choosing an LLC as a business entity.
Some states charge higher fees for forming and operating an LLC compared to other states. Members who work for the LLC and receive a salary are typically subject to payroll or self-employment taxes. Some states do not permit professional groups, such as lawyers, doctors, accountants, and dentists, to operate their practices through a Limited Liability Company.
LLCs offer members a way to limit personal liability. There are instances in which a creditor or other party may pierce the corporate entity to pursue a member’s personal assets for a debt or obligation. Also, it is more difficult to transfer memberships in an LLC than it is to transfer stock certificates in a corporation. Transferring a membership may require the consent of all LLC members. A careful review of the operating agreement is required before a member can transfer an ownership interest in the LLC to another individual or entity.
Because the choice of a business entity impacts numerous aspects of a business, including taxes, personal liability, costs of operation, and day-to-day management and operations, it is best to consult with an attorney before choosing a legal entity for your business. An attorney can review the pros and cons of each business entity to help you choose the structure that provides the most benefits for your business.
Forming an LLC
LLC formation can usually be accomplished in eight steps. Setting up an LLC typically involves:
- Choosing a state in which to form the Limited Liability Company
- Choosing a business name for the LLC
- Appointing a registered agent to serve as the individual or entity authorized to accept professional service or legal process service for the company
- Preparing and executing an Operating Agreement
- Filing the LLC Articles of Organization with the Secretary of State
- Filing for and obtaining an EIN and required permits or licenses
- Opening a business bank account and drafting necessary contracts and agreements
- Registering to do business in another state, if necessary
Anderson Advisors can assist you with all steps required for LLC formation so that you have the peace of mind of knowing that your LLC is a true legal entity that offers all the benefits and advantages of a separate business entity.
Contact Anderson Advisors to Discuss Issues and Questions Related to a Limited Liability Company
If you have questions or need advice related to an LLC, Anderson Advisors is here to help. Contact our firm to discuss questions or issues that you might have as you prepare to form an LLC. We also assist individuals and companies with issues arising from the daily operations and management of an LLC. We want to help you make your company a successful, profitable business venture by providing sound legal, business, and tax advice.
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