Archive for the ‘LLC Formation’ Category

Do All Partners Have to Sign to Form an LLC?

Friday, March 8th, 2013

Not all the owners have to sign to form a limited liability company, but they do all have to sign the Operating Agreement

No, not all of the partners – known officially as owners or members – forming an LLC have to sign the document that creates it.

This document is generally referred to as Articles of Organization, though some states may also call it a “Certificate of Formation” or a “Certificate of Organization.”

In filling out this form, you may have to provide all the names of the LLC’s members, in addition to its name, address, and a few other pieces of information, but not all of the members must literally “sign” the Articles of Organization.

All of your members can choose to prepare and sign the document together, or you can appoint a single person, known as an organizer, to it. This organizer could be one of the members, a lawyer, an agent at the document filing company you are using, or someone else entirely, although the specifics depend on the individual state of incorporation.

Most states do not restrict ownership of an LLC. Members can include individuals, corporations, other LLCs, and foreign entities. As far as numbers go, there is no maximum and most states allow “single member” LLCs, which have just one owner.

If some of your members are concerned about public disclosure, you should note that in most states, ownership of an LLC is not a matter of the public record. But be sure to check with your states, because in a few this is not the case.

The question of who has to sign your Articles of Organization is one that is easily resolved, but other questions about the roles of various members are sure to arise. After the establishment of your LLC it makes sense to create an Operating Agreement that officially delegates responsibility among all of the members, even if it is not required by state law.

An Operating Agreement can determine each member’s role in the business, such as their percent interest, rights and responsibilities, voting power, and allocation of profits and losses.

It also establishes rules for management of the LLC, holding meetings and taking votes, and “buy-sell” provisions that govern what happens if a member wants to sell his interest, dies, or becomes disabled.

Unlike the Articles of Organization, all of the initial members of your LLC do need to sign the Operating Agreement in order for it to be binding. And new members added later on will have to sign a written agreement declaring that they will be bound by its rules.

When you create your LLC with Legal Central, all you have to do is input information into our online questionnaire and we’ll fill out the Articles of Organization for you. One of our agents will perform the role of organizer and sign your documents for you.