LLC Paperwork (6 Most Important Documents You Need)
LLC paperwork is something that many business owners have to do at some point. However, they are not always easy to understand and follow.
As a seasoned specialist in business law and LLC formation, I consulted our legal team and put up a thorough guide to assist you in navigating the procedure quickly and stress-free.
In this article, we've listed the top six documents that you need to run an LLC.
Quick Summary
- The five most important documents that you must have to run an LLC are a Certificate of Formation, an Operating Agreement, a Business License, EIN, and an Annual Report.
- When managing an LLC, operating agreements outline the management structure and voting rights of the members.
- According to the American Bar Association, about 80% of LLCs have operating agreements to clarify rules and member voting rights.
- In my experience, to form an LLC, in addition to the mandatory documents, you will have to open a bank account and pay taxes.
6 Most Important LLC Documents
Before you can establish an LLC in any state, you have to file the right paperwork.
1. Articles of Organization
All states require LLCs to file Articles of Organization or Certificates of Formation before they can be officially formed. According to the National Small Business Association, this requirement applies to 100% of LLCs across the United States, standardizing the formation process nationwide.
These business forms normally include your company's name, address, phone number, and email address of a person authorized to accept legal documents.
Drawing from our experience, you might also have to include other specific details about your company, such as its purpose and registered agent.
This document has to be filed with the Secretary of State online, by mail, or in person and the filing fees vary depending on your state.
2. Operating Agreement
Operating agreements are legal documents that set out the rules and voting rights of members. According to a survey by the American Bar Association, approximately 80% of all LLCs have formal operating agreements in place to ensure clarity and governance within the organization [1].
An operating agreement is important because it establishes voting rights, member capital contributions, management structure, and the allocation of profits/losses among partners.
From our practical experience, in the case of a dispute or disagreement among LLC members, operating agreements can provide detailed instructions on how to resolve it.
In addition to basic information about who owns your company and what percentage each member holds in equity, make sure your operating agreement includes:
- Who will manage the company?
- How much money is required from new owners when they join?
- What happens if someone wants to sell their interest in the business?
Legal counsel should review operating agreements before signing them because they are legally binding documents.
This means that all partners must follow what is written in their own personal copy of this document.
Only a few states require that LLCs file their Operating Agreements with the state: Missouri, California, New York, Delaware, Maine, and Nebraska.
"An operating agreement safeguards the LLC status of your company by serving as a contractual agreement among members, delineating their respective rights, roles, and responsibilities."
- Delina Yasmeh, J.D./Tax LL.M, Distinguished Expert in Mergers & Acquisitions
3. Business Licenses
Business licenses are usually issued by the secretary of state or the Department of Revenue and Taxation.
From my experience running several LLCs, not all businesses will be required to obtain a business license before they can start operating.
For example, an LLC that provides professional services like law, accounting, or medical business will be required to obtain licenses.
LLCs that provide non-professional services like sales and marketing might need licenses in most states.
For this reason, it is important to check with your secretary of state's office before you file your business formation documents.
4. Employer Identification Number
An EIN or Employer Identification Number is a number that the IRS assigns to business entities.
LLCs require an EIN to open a business bank account, register with state agencies for required licenses and permits, or pay employer taxes.
There are three ways you can get an EIN:
- Request one from the IRS online using your existing social security number (IRS Form SS-4)
- Applying through a fillable PDF form and sending it in by mail along with official documentation
- Get assigned one automatically when filing a federal tax.
5. Annual Report
An annual report is a form that must be filled out and filed by an LLC which provides the state with up-to-date information on the business's legal status, management, and registered agent (if you have one).
You should also provide the address of your principal office or place of business within the state where you are filing.
There should also be the number of members at the time of filing the report and any other changes to this information since it was last submitted.
The fees vary from $20 to $200 per year, depending on how many members you have.
6. Publication Requirement
The publication requirement for LLC formation, required in some states like New York, demands that new LLCs publish a notice in local newspapers for a few weeks to announce their creation.
This step aims to ensure transparency and inform the community and potential creditors.
Once completed, the LLC must submit an affidavit of publication to the state as proof of compliance.
FAQs
How Can I Get a Copy of My LLC Documents?
You can get a copy of LLC documents by contacting the secretary of state in the state where your business is located. Articles of organization are the main LLC documents, and they are always made publicly available.
How Do I Find My LLC Certificate?
To find your LLC certificate, request a certified copy of the Articles of Organization from the Secretary of State. This can be done online, in person, or by mail in most states.
What Are LLC Entity Documents?
LLC entity documents are the same documents needed for setting up a legal business entity.
Primarily, this involves the Certificate of Formation.
What Document Shows Ownership of an LLC?
The ownership of an LLC is clearly outlined in the Operating Agreement and Certificate of Formation.
The documents list the complete name, business address, and contact information for each member, in addition to setting out their shared interests in the company.
References:
- https://www.americanbar.org/content/dam/aba/publications/probate_property_magazine/v30/05/2016_aba_rpte_pp_v30_5_article_linde_hirschfeld_williams_operating_agreements_today.pdf
