Two main types of businesses exist in the world: unincorporated and incorporated companies. It makes sense that these two types of companies are required to fill out different forms: articles of organization and articles of incorporation, respectively.
Company Type
The main difference between articles of incorporation and articles of organization is the type of company you want to create.
Articles of incorporation aim to help a company become an incorporation. This releases members who created the company from responsibilities and debt incurred by the business because the company will be seen as a person completely separate from those that created it. So if the incorporation were to acquire a lot of debt, creditors are unable to sue the individual members for the money.
People that complete articles of organization have the aim to create a limited liability company, which is a business structure combining the pass-through taxation of a sole proprietorship with the limited liability of a corporation (LLC). An LLC is not a corporation but the legal form of a company, with limited liability for its owners. A limited liability company can be more flexible than a corporation and is well suited for businesses with a single proprietor. Individuals that own an LLC are responsible for the actions of the company as it isn’t seen as a separate entity.
Filing and Fees
Completing articles of incorporation is relatively straight-forward. You must obtain paperwork from the Secretary of State or Department of Commerce, fill it out, and then file at the same office when finished. When you file articles of incorporation you’ll be required to pay a fee, which varies from state to state. According to FindLaw the fee can cost $30 to $300, plus taxes and any other additional charges.
Articles of organization may be a bit more complicated to file for since becoming a limited liability company itself is a complex process. Each state has its own laws regarding what you need. Typically, an LLC is required to provide its name, the address, name of its registered agent, the address of its principle office, and the duration of the formation. Your state may require extra information, which could require you to seek out legal assistance. Of course, this can increase the cost of the process. State fees can run anywhere from $50 to $800, not including additional costs.
Other Requirements
Every state is different as you create a corporation or limited liability company. It’s important to check with your Secretary of State or Department of Business and Commerce to make sure you’re completing all requirements. Sometimes this information can be found on the website of these governmental offices, but speaking to government officials can also help you through the process of completing the paperwork.
