The Ultimate Guide to Business Formation: Articles of Organization vs Operating Agreement

When starting a business, one of the most crucial steps is deciding how to structure your company. This involves creating a set of documents that outline the company's purpose, ownership, and governance. Two of the most important documents in this process are the Articles of Organization and the Operating Agreement. In this article, we'll explore the differences between these two documents and how they work together to form a solid foundation for your business.

The Articles of Organization, also known as the Certificate of Formation, is a document filed with the state to officially register your business. This document outlines the basic information about your company, including its name, address, and purpose. It also designates the initial directors and officers of the company.

The Operating Agreement, on the other hand, is a document that outlines the internal governance and operational procedures of your company. This document is typically created by the company's owners and outlines how the company will be run, including matters such as decision-making, voting, and dispute resolution.

While both documents are important, they serve different purposes. The Articles of Organization is a public document that is filed with the state, while the Operating Agreement is a private document that is kept within the company. The Articles of Organization is typically used to establish the company's legal identity, while the Operating Agreement is used to establish the company's internal governance and operational procedures.

In this article, we'll explore the differences between the Articles of Organization and the Operating Agreement, and how they work together to form a solid foundation for your business. We'll also provide some tips and best practices for creating these documents.

Key Takeaways:

• The Articles of Organization is a public document that is filed with the state to officially register your business.
• The Operating Agreement is a private document that outlines the internal governance and operational procedures of your company.
• The Articles of Organization is typically used to establish the company's legal identity, while the Operating Agreement is used to establish the company's internal governance and operational procedures.
• Both documents are important for business formation, and should be created in conjunction with each other.