Understanding the Difference Between Operating Agreements and Articles of Organization

An operating agreement and articles of organization are two distinct documents that are often confused with each other. While both are essential for a limited liability company (LLC), they serve different purposes and have different requirements. In this article, we will delve into the differences between operating agreements and articles of organization, helping you understand which one is right for your business.

Articles of organization, also known as a certificate of formation, is a document filed with the state to officially create an LLC. This document outlines the basic information about the company, including its name, purpose, and management structure. It is a public document that is available for anyone to view.

An operating agreement, on the other hand, is a private document that outlines the internal workings of an LLC. It is a contract between the members of the LLC that outlines the ownership structure, management responsibilities, and financial arrangements. It is not filed with the state and is only accessible to the members of the LLC.

The main difference between the two documents is that articles of organization are a public record, while an operating agreement is a private contract. This means that anyone can view the articles of organization, but only the members of the LLC have access to the operating agreement.

Another key difference is that articles of organization are required by the state to form an LLC, while an operating agreement is not. However, having an operating agreement in place can provide protection for the members of the LLC and help prevent disputes.

When creating an LLC, it is essential to understand the difference between operating agreements and articles of organization. While both documents are necessary, they serve different purposes and have different requirements. By understanding the differences between the two, you can ensure that your LLC is properly formed and that you have a solid foundation for your business.

In summary, articles of organization are a public document that outlines the basic information about an LLC, while an operating agreement is a private contract that outlines the internal workings of the LLC. While both documents are essential, they serve different purposes and have different requirements.

Key Takeaways:

• Articles of organization are a public document that outlines the basic information about an LLC.
• An operating agreement is a private contract that outlines the internal workings of an LLC.
• Articles of organization are required by the state to form an LLC, while an operating agreement is not.
• Having an operating agreement in place can provide protection for the members of the LLC and help prevent disputes.