Articles of Organization
Articles of Organization or Articles of Incorporation, people often ask me how to file Article of Incorportation for their LLC . I tell them there is no such thing! Articles of Incorporation are for corporations. When you form an LLC you file articles of organization. Filing a copy of the articles of organization is the first step in formation of an LLC. The LLC articles of organization can be obtained on the state website of the state where you intend to establish your LLC.
When you decide to form a company, you need to make decisions about filing your articles of organization, LLC operating agreement design, taxation of your LLC, and lots of other issues. But, let’s just discuss the operating agreement in this article.
The LLC Articles of Organization
Although you can use your favorite state’s website to get your articles of organization, LLC formation requires some thinking. There are a number of “blanks” on the articles of organization form. How do you fill them out?
For example, do you want your articles of organization, LLC filing, and entire structure to show a single member or multiple members? The states are starting to attack single member LLCs and remove their “charging order” protection, so how you answer this question is important.
Note that the “corporate shield” holds just fine for a single member LLC. Provided, the LLC is established properly, filed properly, and maintained properly. It’s only the charging order protection that is effected.
Utah has actually passed legislation that removes the charging order protection for single member LLCs. Other states are eroding the protection through court rulings.
Charging order protection is a big deal, and the state’s treatment of the protection should enter into your decision to submit your articles of organization and LLC fee payments to any state.
The LLC Operating Agreement
Once all the articles of organization, LLC charging order protection, and state fees have been addressed, you need to write the “bible” for your LLC. How will you run your LLC, and how will the world have to deal with your LLC? You get to dictate all of these issues in the terms of your operating agreement.
The LLC articles of organization, LLC operating agreement, and maybe even some supporting documents can be found on the internet at the LegalDoom sites. The problem is they only get you halfway there. There’s never a discussion of the single member issues, asset protection or tax issues.
I don’t know how many people I talk to a month that have the articles of organization, LLC stamped papers from the state, and nothing else. The internet set up sites charge more if you want the operating agreement papers. The operating agreement isn’t just a boiler plate deal. You get to write it.
LLC Taxing
Once you get your LLC articles of organization, LLC operating agreement, and a LLC tax ID number, its time to make some important tax decisions. How will your LLC be taxed? Oh, as far as the internet sites are concerned, that has nothing to do with setting up your LLC.
Excuse me! Your tax decisions are the core of your LLC establishment. How you are taxed may mean 20% or 30% more money transferring from your company to your pocket. If there’s no discussion of the complex tax issues, the internet site didn’t get you even halfway there. They only got you a third of the way there.
After the taxes are all decided upon and the proper forms have been filed with the IRS, it’s time to start “managing your LLC.” Yes, there are formalities you have to follow to make your LLC give you the tax advantages and asset protection shields you desperately need and deserve.
The bottom line is just filing your LLC articles of organization, LLC tax ID number, and maybe your LLC operating agreement isn’t going to cut it. Yes, you’ve got a car, but all you are doing is playing with the electric window buttons. You have no clue how to double the asset protection potential of your LLC or make an extra 20% this year.
The LLC is so powerful, most advisors have no clue. You’ve got to get this LLC stuff under your belt to be successful in today’s tough times.
