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Forming
Limited Liability
Companies
Establishing
a Limited Liability Company, is very
similar to forming a corporation. First, a business lawyer begins the
LLC formation by filing Articles (or Certificate) of Formation with the
Secretary of State of the appropriate State.(Note, you are forming a
llc, you do not incorporate a llc.)The Articles of formation outline
the name, purpose and initial officers of the LLC and give public
notice of the filing. Next, the llc operating agreement outlines how
the business still actually function.
A.
Organization. Limited
liability companies are organized by filing a Certificate or Articles
of Formation with the Secretary of State of the State of Formation. For
example, in a Certificate of Formation, N.J.S.A.
42:2B-11 requires the following:
(1) Name of
the company
(2) Registered
office and agent
(3)
Certification of the founding
members
(4) Date of
dissolution of limited
liability company
(5)
"Other matters"
In other
sections of the Certificate or
Articles of Formation, it may be appropriate to the list the name of
the "Tax matters
member" for dealing with the Internal Revenue Service. Additional
provisions resting borrowing by members of the LLC, indemnification of
the managing members, and the purpose may also be included.
B.
Operating Agreement. The
Operating Agreement is an agreement between
the members of a limited liability company, and governs the affairs of
the business. However, unlike
corporate By-laws, there is great flexibility in the Operating
Agreement. The creativity of the business attorney in identifying and
reflecting the needs of the owners determines the content of the
Operating Agreement.
C.
Conclusion. The
Limited
Liability Company is an extremely flexible tool which
has the limited liability advantages of a corporation and the tax
advantages of a partnership or sole
proprietorship.
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