There are quite a few perks to forming an LLC, like limited personal liability and tax deductions, and while LLCs are generally the most flexible business structure, there are still some common forms and documents that need to be prepared and filed.
The Articles of Organization, known as the Certificate of Formation in Texas, is one of those documents that you must file with the state in order to get your LLC up and running.
Think of this document like the birth certificate for your business – it’s extremely important that you get the information correct. Here are all of the details you need to know.
What are Articles of Organization?
Articles of organization are part of a formal legal document used to establish a limited liability company (LLC) at the state level.
Due not that this specific document has a different name for each state, and each state may require different information, but the result is the same.
This document outlines the basic details of your company, and once filed, it shows that your LLC is officially formed and establishes it as a separate legal entity from its members. That legal separation is one of the main reasons business owners form an LLC.
What is the Purpose of the Articles of Organization?
The purpose of the Articles of Organization is to legally form your business.
All LLC needs its Articles of Organization approved before it can operate legally, and before it can begin checking off other to-dos for its list. For example, you must have an approved Articles of Organization before obtaining an Employer Identification Number (EIN), opening a business bank account or credit cards, and applying for any business permits or licenses.
What Information Do You Need to Include in the Articles of Organization?
The information included in the Articles of Organization vary from state to state - the Texas Articles of Organization can be found on the state agency website. However, they all typically include:
- Company Name
- Statement of Purpose / General Description
- Place of business / Physical Address
- Registered Agent
- Names of Management
- Effective Date
- Duration of LLC
Articles of organization can also be simple or complex, depending on what the intention of the LLC is. Some LLCs choose to file basic, minimal articles. Other LLCs that plan to stay in business for years, often include more information in their Articles.
What is the Difference Between the Articles of Organization and the Articles of Incorporation?
When you choose to legally run a business, you must choose an entity. Two of the most popular types are a limited liability company (LLC) and a corporation.
If you choose to form an LLC, it’s required by the state to file Articles or Organization. If you choose a corporation then you must file Articles of Incorporation. The information needed for both articles differ based on the state, but there are a few key differences between the two.
Articles of Organization
In the articles of organization an LLC is required to provide its name, the address and name of its registered agent, a physical address (which may be the same as that of the agent), and the duration of formation (which can be perpetual). Additional information such as contact information for members and the purpose of the company may be required.
Articles of Incorporation
Articles of Incorporation requires the corporation's name, number of shares it’s authorized to issue, the address and name of its initial registered agent, and the name and address of the shareholders incorporating. The purpose of the company and whether it’s intended for profit also often required.
The takeaway is that Articles of organization are specific to limited liability companies, while Articles of Incorporation are specific to corporations.
Due note that the state also requires businesses to pay a fee when it files the Articles of Organization. In Texas, this is a one-time start up fee of $300.
5 Simple Steps to File the
Articles of Organization in Texas
If you are looking to file your articles of organization in Texas, follow these 5 steps to file the articles of organization.
Step 1: Find Online Forms
Before you begin the process of filing your Articles of Organization, you must locate the forms for Texas online. You can download and mail in your Texas Certificate of Formation or you can create an account and file online.
Step 2: Fill Out the Certificate of Formation
There are 4 main Articles, and you will need to know this information to complete each Article:
- Entity Name and Type
- Registered Agent Name and Address
- Governing Authority Type
- Business Purpose
Step 3: File the Texas Certificate of Formation
To register your LLC in Texas, you’ll need to file the Articles of Organization with the Texas Secretary of State either by:
- Completing the forms online.
- Submitting a hard copy by mail or in person.
Once you’ve filed your Articles of Organization, then you can:
- Create an Operating Agreement
- Get an EIN
- Open a Business Bank Account
- Get Licenses and Permits
Reasons Articles of Organization may be Rejected
Submitting an Articles of Organization to create an LLC does not mean the state will automatically approve your new business. Here are some of the common reasons why you may get rejected:
- Fees not included
- Legal formalities not met
- The proposed name of the LLC is similar to another business within the state
- The proposed name does not meet requirements of the state
- Information is illegible or incomplete
To help better your chances of not getting rejected, seek the help of a business lawyer.
How a Lawyer Can Help Submit Articles of Organization
You have the option to complete and file Articles of Organization yourself but remember that each state has default regulations for certain aspects of the Articles. Are these default rules what you want for your business? Does your Operating Agreement override any state provisions?
There are several details that can easily be overlooked when forming and filing Articles of Organization. If you want to ensure you’re properly filing, hire a business lawyer to help you prepare your LLC Articles of Organization.