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

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

An operating agreement is a document that outlines the ownership, management, and operational structure of an LLC. It is a contract between the members (owners) of the LLC, outlining their roles, responsibilities, and rights. The operating agreement is not filed with the state, but it is essential for the internal governance of the LLC.

On the other hand, articles of organization are a document filed with the state to form an LLC. It is a public record that contains basic information about the LLC, such as its name, address, purpose, and management structure. The articles of organization are a requirement for forming an LLC and must be filed with the state before the LLC can begin operating.

Key differences between an operating agreement and articles of organization include:

• Purpose: An operating agreement outlines the internal governance of the LLC, while articles of organization are a public record that provides basic information about the LLC.
• Content: An operating agreement contains detailed information about the LLC's ownership, management, and operational structure, while articles of organization contain basic information about the LLC's name, address, purpose, and management structure.
• Filing: An operating agreement is not filed with the state, while articles of organization are a public record that must be filed with the state.
• Public Access: Articles of organization are a public record, while an operating agreement is a private document.

When forming an LLC, it is essential to understand the difference between an operating agreement and articles of organization. An operating agreement provides a framework for the internal governance of the LLC, while articles of organization provide a public record of the LLC's basic information. By understanding the differences between these two documents, you can ensure that your LLC is properly formed and governed.

Key Takeaways:

• An operating agreement outlines the internal governance of an LLC.
• Articles of organization are a public record that provides basic information about an LLC.
• An operating agreement is not filed with the state, while articles of organization must be filed with the state.
• Articles of organization are a public record, while an operating agreement is a private document.

Conclusion:

In conclusion, an operating agreement and articles of organization are two distinct documents that serve different purposes. While an operating agreement provides a framework for the internal governance of an LLC, articles of organization provide a public record of the LLC's basic information. By understanding the differences between these two documents, you can ensure that your LLC is properly formed and governed.