Limited Liability Company, or LLC for short, has been a go-to business structure for many American entrepreneurs. Over the last 20 years, the number of limited liability companies has surpassed the 20-million mark, which makes up for 35% of all US businesses.
It's easy to see why LLCs have become so popular. The benefits include personal asset protection, pass-through taxation, increased credibility, and relatively easy registration. To set up an LLC you need a so-called LLC organizer. In this article, we'll try to answer every question about LLC organizers and break down the importance of this role.
Table of Content
An LLC organizer is a person or company that is responsible for the entire formation process for a limited liability company. A typical list of organizer duties consists of several items:
Sometimes, an LLC organizer takes part in creating an operating agreement for the company, but it's quite rare, so the main focus of the organizer revolves around the Articles of Organization.
The Articles of Organization are arguably the most essential part of the company formation. It's a document that contains some official details about the LLC and allows the state to get a general idea about your business.
Depending on the state, the Articles of Organization can be also called Certificate of Organization or Certificate of Formation.
Note: for corporations, you need to create a similar document known as Articles of Incorporation.
Usually, the Articles form includes 6 sections:
You can’t just call your LLC whatever you want and call it a day. There is a list of words banned on the national level plus each state has its own restrictions regarding business names. Typically, you need to avoid names that contain:
The Organizer has to make sure that the name of the LLC is legit and available. Otherwise, the Secretary of State will reject the application so you’ll have to submit a new set of documents and pay the filing fee one more time.
Note: we recommend using free business entity search tools, which are available on the official websites of each Secretary of State and most reliable LLC formation services.
Next, the Organizer must specify the principal place of business. It’s the address of the main office, the owner’s house, a retail store, a mechanic’s garage, or another place where the LLC conducts its business or holds ownership and management meetings.
Most states only accept physical street numbers. In rare instances, you are allowed to list a PO box as the main address, but this will most certainly hurt your business reputation.
A registered agent is the middle link between a business and the state. It's an individual or entity that receives mail and other correspondence sent to the company by the state, IRS, or legal agencies. The Organizer must ensure that the agent is at least 18 years old, has a permanent street address in the state of incorporation, and is available at the mentioned location 5 days a week from 9 AM to 5 PM to meet the courier.
Tip: we recommend hiring a professional registered agent to protect corporate privacy, keep up with important deadlines and lawsuits, and maintain flexibility of both working schedule and location.
The 4th item in the Articles of Organization usually requires the Organizer to provide some details about the LLC management. An LLC can be operated in three different ways:
Some states just need you to choose one of the options above, while other Secretaries want to know the names and addresses of every manager of the company. It's up to the Organizer to tick the right box or correctly list all people that take part in running the LLC.
Next, the Organizer must describe the nature of the company or, in other words, explain why it was created and what will it do. A number of states accept basic statements about “lawful business activities”, however, in some cases, the purpose has to be more specific and describe the business in more detail.
In order to speed up the registration process, some Secretaries skip this part altogether or have the purpose statement already filled out in the Articles template.
After completing and checking the Articles of Organization for mistakes, the Organizer has to list their full name and sign the copy.
In some states, like Arkansas or California, all LLCs must pay an annual fee for the right to operate on their territory. This is called franchise tax, and for its purposes, the Articles of Organization in those states require the Organizer to designate at least one person as a tax officer.
Important: only LLC members of managers can be franchise tax officers.
The Articles of Organization can usually be filed online or by mail. In some states, you can bring the documents to the Secretary personally, but this option is only valid for the residents of the state capital in question where the Secretary is typically located.
Mail is considered to be the slowest way of filing due to the time it takes for the letter to reach the Secretary and then get back to the Organizer with a stamp of approval or rejection. Another downside of the traditional post is the inability to pay with a credit card or cash. Secretaries only accept letters with checks or money orders which is not what we’d like to see in 2022.
Online applications are processed faster and it only takes around 15 minutes to complete the form. The problem is actually finding where to do it since each Secretary of State has its own website with unique navigation and menus. However, credit card payments give online filings a big advantage.
Wanna know how long does it take to set up an LLC? Check out the article!
Submitting documents in person takes little time and might be a good choice if you live next to the Secretary building. You can pay with cash on the spot, but be prepared to be charged a few dollars more than with the other methods (for example, in California, you’ll have to pay $15 extra for an in-person application). Once the LLC documents are processed and approved, you can get them back in the same building which simplifies things a lot.
The LLC Organizer has to evaluate all pros and cons of each method and decide which one of them is going to be faster, cheaper, and more convenient in their particular case.
There are almost no restrictions regarding the person who can act as an LLC Organizer. The only limit that’s somewhat important is the Organizer’s age (18 years old), but very few states actually force it. Other than that, you can choose pretty much anyone. However, some options are obviously better than others, so here are our top picks for the Organizer role:
The general rule about LLC organizers is selecting a person that you can absolutely trust or going with someone with business formation experience. An Organizer with low qualifications is likely to make costly mistakes in the Articles of Organization, such as downloading the wrong form or misspelling someone’s name, which may result in a rejected application so the registration process would drag on for a long time.
An LLC member is a person who is directly involved in running the company. Usually, members are also owners which means they make important business decisions, invest their own money in the LLC, and get their percentage of the revenue.
On the other hand, an Organizer is someone specifically chosen to handle the LLC formation procedure without much else to do. Quite often, one of the LLC members is delegated to perform the Organizer's duties, but it as well can be anyone else.
A registered agent (aka statutory agent or agent for service of process) is used for communication with the state and federal authorities, primarily for receiving mail and other correspondence. Just like an Organizer, it can be basically anyone, but with a few exceptions:
A registered agent takes no part in the creation of the company, however, it's possible to pick the same person or entity to serve as both your registered agent and organizer.
We admire entrepreneurs that utilize the do-it-yourself approach and choose to become their own registered agents, managers, promoters, and organizers. This takes a lot of passion, dedication, and valuable resources. In our opinion, that's not the smartest way to run a company.
One of the main elements of a successful business is delegation. If there is someone who can do certain things better than you, it's a good idea to assign that person to assist you. Enter business formations services, the companies that make a living by helping up-and-coming entities get on their feet and start growing as fast as possible.
There are a lot of advantages that come with hiring experts in the LLC industry:
The majority of popular services have at least 8 years of LLC formation mileage, while some veterans have been on the market for over three decades. With thousands of successfully launched businesses on their resumes, there is nothing that can surprise these experienced companies. They know the business laws of every state, have representatives and connections in all major cities across the USA, and also have a complete library of necessary templates and documents available at any time.
When hiring a professional service, you’re pretty much guaranteed a positive outcome. No company would like to get its reputation tarnished by negative reviews, so 99% of the time, they do their best to complete the LLC registration procedure with as few problems as possible.
Furthermore, many LLC services have a customer-friendly refund policy for up to 60 days in case something does go wrong. As a result, the Organizer’s track record remains clean and your money stays in your pocket.
A professional Organizer offers much more than just handling the Articles of Organization. In fact, it can help you during the entire life cycle of your business. Big LLC services can:
Passing the formation duties to the experts allows business owners to focus on more important things, such as assembling the staff, buying supplies, arranging the office, signing contracts, and so on. In other words, the less annoying paperwork you have to go through, the more time you’ll spend actually doing business.
There are dozens of formation companies to choose from, so we’ve picked 5 LLC organizers that, in our opinion, provide the best value and service quality.
The LLC service from Austin, Texas is one of the youngest entries on this list, but its reputation is already legendary. ZenBusiness covers all 50 states and has over 300,000 formations under its belt.
Northwest has been in business for over 20 years, making it one of the most accomplished services here. The company prides itself on excellent registered agent assistance, but it also has an extended roster of LLC and corporation features.
LegalZoom is an LLC formation powerhouse with an impressive resume. The company boasts an impressive staff of battle-tested lawyers, attorneys, and other specialists that are ready to help their customers 7 days a week.
This Houston-based company has changed the formation game with arguably the most affordable plan you can find. IncFile has been trusted by over 20,000 business owners, solidifying it as one of the top dogs in the game.
Formed in 1989, IncAuthority has a long track record and a variety of features for any budget, including filing services, annual support, online storage, and tax planning.
At the end of the day, it’s up to you to choose the organizer for your LLC, but we strongly advise hiring an experienced provider. There’s nothing more important in business than time, and a professional LLC service can save you a lot of it.