LLC Articles of Organization vs Operating Agreement: What's the Difference?

When it comes to forming a Limited Liability Company (LLC), there are several key documents that must be prepared and filed with the state. Two of the most important documents are the Articles of Organization and the Operating Agreement. While both documents are crucial for the formation and operation of an LLC, they serve different purposes and have distinct characteristics. In this article, we will explore the differences between LLC Articles of Organization and Operating Agreement, and provide guidance on when and how to use each document.

The Articles of Organization, also known as the Certificate of Organization, is a document that is filed with the state to officially form an LLC. This document is typically prepared by the LLC's organizer or founder and must be signed and submitted to the state's business registration office. The Articles of Organization typically include basic information about the LLC, such as its name, address, purpose, and management structure. The document also outlines the LLC's registered agent and the name and address of the person or entity that will serve as the LLC's registered agent.

The Operating Agreement, on the other hand, is a document that outlines the internal operating procedures and rules of the LLC. This document is not filed with the state, but rather is an internal document that is used by the LLC's members and managers to govern the company's operations. The Operating Agreement typically includes provisions related to ownership, management, decision-making, and financial matters. It may also outline the roles and responsibilities of the LLC's members and managers, as well as the process for making decisions and resolving disputes.

One of the key differences between the Articles of Organization and the Operating Agreement is that the Articles of Organization is a public document, while the Operating Agreement is a private document. This means that the Articles of Organization can be accessed by anyone, while the Operating Agreement is only available to the LLC's members and managers. Another key difference is that the Articles of Organization is a required document for the formation of an LLC, while the Operating Agreement is not. However, having an Operating Agreement in place can provide important protection and guidance for the LLC's members and managers.

So, when should you use the Articles of Organization versus the Operating Agreement? The Articles of Organization should be used when forming a new LLC, as it is a required document for the state's business registration office. The Operating Agreement, on the other hand, should be used to outline the internal operating procedures and rules of the LLC. This document should be prepared and signed by the LLC's members and managers, and should be kept on file for reference purposes.

In summary, the Articles of Organization and the Operating Agreement are two distinct documents that serve different purposes in the formation and operation of an LLC. While the Articles of Organization is a public document that is required for the formation of an LLC, the Operating Agreement is a private document that outlines the internal operating procedures and rules of the LLC. By understanding the differences between these two documents, LLC owners and managers can ensure that their company is properly formed and operated in accordance with state laws and regulations.

Key Takeaways:

• The Articles of Organization is a public document that is required for the formation of an LLC.
• The Operating Agreement is a private document that outlines the internal operating procedures and rules of the LLC.
• The Articles of Organization should be used when forming a new LLC, while the Operating Agreement should be used to outline the internal operating procedures and rules of the LLC.
• Having an Operating Agreement in place can provide important protection and guidance for the LLC's members and managers.