Limited Liability Companies: The Building Blocks

Bunger & Robertson / / Bloomington, Bunger & Robertson, Business, small business, , , ,

 

Thinking about starting a business? Limited liability companies (LLCs) are one of the most used entity-types today due to their relatively straightforward formation requirements, flexibility, and protection from personal liability. Here are a few characteristics that distinguish LLCs from other entity-types:

    1. Articles of Organization
        • Every LLC must file its Articles of Organization with the Indiana Secretary of State. This filing can be completed online for a small fee. The Articles of Organization must contain (1) the name of the LLC, (2) the name and street address of the LLC’s registered agent, (3) the date of dissolution of the LLC, or a statement that the duration of the LLC is perpetual, and (4) if the LLC is to be managed by managers, a statement to that effect.
    2. Members
        • Members are persons or other entities who own an interest in the LLC. Unless the Articles of Organization vest membership in a manager(s), the members have the right and authority to manage the affairs and make all decisions of the LLC (subject to any provisions in an operating agreement restricting management rights and duties).
    3. Managers
        • Managers are an optional component of an LLC. In Indiana, if the LLC is to be manager-managed (instead of member-managed), the Articles of Organization must contain a statement to that effect. Unless otherwise required, a manager does not need to be a member of the LLC. LLCs with several members may opt to appoint a manager to streamline the decision-making process for the LLC.
    4. Operating Agreement
      • An operating agreement is an optional governing document of the LLC. It is strongly recommended that LLCs with more than one member draft and execute an operating agreement. Operating agreements may contain provisions relating to the control and management of business affairs, the way profits or losses of the LLC will be distributed, establishment of officers such as a President and Secretary, the terms of assignment of a member’s interest in the LLC, dispute resolution, and more. An operating agreement is effective once it is signed by all members of the LLC.

Of course, there is more that goes into creating and managing an LLC. The needs of every business and every situation are unique. If you have questions regarding the formation of a LLC or another entity type, contact the attorneys at Bunger & Robertson.