Last updated: September 16, 2022

If you are starting a business, you must know its purpose from the effective date of its creation. This is especially true for any types of limited liability companies (LLCs), including the professional limited liability company (PLLC), which have limited liability protection.

The LLC purpose statement is a document that states the purpose of your LLC management. This document is filed with the state when you form your LLC. The LLC purpose statement can be used to help prove the purpose of your LLC if it is ever challenged in court.

There are many reasons to file an LLC purpose statement. Some of the most common reasons are to show that your limited liability company is correctly formed under your state law, explain why you are exempt from specific regulations and tax purposes.

Why Does an LLC Need a Purpose Statement?

Writing a signature on paper

An LLC should have a purpose statement. Limited liability companies should contain specific information for their professional limited liability company. These include activities they are trying to pursue and what legal acts permitted in while running the company. Most states do not require a purpose statement, but it can be constructive to have one.

An LLC general purpose statement is what the LLC plans on doing for business (generally speaking). LLCs should try and be as specific as possible when describing their lawful business activities and the company's future.

LLCs should also think about legal acts they could engage in while running the company. It is essential to conduct your business activities legally permitted in your state.

Knowing what your company may or may not do will help you stay within the boundaries of the law.

Having a clear purpose statement will also make it easier to communicate your company's goals and objectives to others. When people know what your company may do, they might be more likely to want to work with you or invest in your business name.

How Do You Write a Purpose Statement for an LLC?

Your purpose statement should be brief and precise. It should outline the primary business activities your LLC will engage in.

Your articles of organization may also require a company's vision and mission statement. This statement should provide more detail about your company's long-term goals and objectives.

Consult your LLC formation documents if you're unsure what to include in your business purpose. These documents will outline the specific requirements for your state.

If you need help drafting your business purpose statement or mission statement, contact an attorney for legal or tax advice. An attorney can help you ensure that the documents filed will comply with state law, such as the articles of organization.

Drafting a business purpose can be tricky. Contact an experienced attorney for assistance and legal advice if you're unsure where to start. Such person can help you create a purpose statement in line with state law.

Examples of an LLC Business Purpose Statement

Pointing at documents and signing it

There are many reasons to form an LLC, but one of the most common is creating a business entity with a specific purpose. This business purpose can be anything, from providing professional services to manufacturing products.

When you form an LLC, you must file Articles of Organization with the state. In these articles of organization, you must list the business purpose of the LLC alongside the LLC name.

Here are a few examples of LLC business purpose statements:

  1. The LLC will operate as a manufacturer of widgets.
  2. The LLC will provide professional consulting services to businesses in the local area.
  3. The LLC will act as a holding company for the business owner and their other businesses.

As you can see, there are many possibilities for what an LLC can do as its business purpose. It's important to tailor your business purpose to fit your specific business needs.

What Should I Put for the Business Purpose of an LLC?

The business purpose of an LLC states what your company may do. It can be helpful to include this in your LLC operating agreement, as it will outline why your company exists and what its goals are. An LLC's registered agent needs to abide to these since they represent the LLC.

There are no restrictions on the language used in the operating agreement section. Still, it is essential to remember that this business purpose will become its primary focus. The information provided should not be vague or too general.

Some things you may want to consider putting in your lawful business purpose include:

  • The products or services that the company will offer
  • The geographic area in which the company will do business
  • The type of customer the company plans to serve
  • The type of company it is (for example, a for-profit corporation or limited liability company).

Tell Me the Business Purpose of an LLC?

Holding and writing the paper

An LLC, or limited liability company, is a business structure that provides personal liability protection for its members.

This means that if the business owes money or gets sued, the members' personal assets are protected. LLCs are popular among small business owners because they are simpler and less expensive to set up than corporations.

LLC initial members are typically business owners who want to limit their personal liability for business debts and lawsuits.

However, anyone can own an LLC, including individuals, other businesses, or even other LLCs. There are no restrictions on the type of business that can be operated as an LLC.

FAQs

What Makes a Great Business Purpose?

A great business purpose should be inspiring, clear, and concise. It should describe the company's reason for existence and what it stands for.

Can You Change the LLC Purpose?

Yes, you can change the LLC purpose. However, you should make sure that the new business purpose is still relevant to your company's mission and goals. Changing the LLC purpose can help to clarify your company's identity and inspire employees and customers alike.

How Do LLC Formation Documents Work?

LLC formation documents typically involve filing articles of organization with the state in which you wish to do business. The articles of the organization will outline the LLC's purpose and members. Once the articles are filed, the LLC will be created and can conduct business in the state.

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