04 February 2019

The excitement of a new business venture can be intoxicating. But nothing will bring you down faster than the sea of red tape you must wade through to really get your business started. As a way to help, we’ve detailed the most common entity documents entrepreneurs need and what each one must contain. Hopefully, this will give you a head start on your next business venture.

The paperwork you’ll need to file in order to properly start your business will vary based on a number of factors. First, you have to take into consideration your location. Certain states and localities have specific requirements for establishing a business, so it is always best to check for local regulations. The second set of variables concerns the type of entity you’ve chosen to begin. The needs of a sole proprietorship or a partnership differ from those of an LLC or corporation and so on.

Entity Document Definition

Certificate of Assumed Name

If you are opening a sole proprietorship or an unincorporated partnership, the amount of paperwork you must complete is relatively light. One thing you will need to do, however, is fill out a Certificate of Assumed Name. In most states, these forms can be found in the county clerk’s office, and registering them involves a nominal fee. This form aligns the assumed name (the name you have chosen for the business) with the name of the business owner, certifying that there exists no separation between the personal and the professional for tax and liability purposes. The form works the same way for unincorporated partners, but such partners should have a signed partnership agreement established prior to filing a Certificate of Assumed Name.

Certificate of Partnership

If two or more business owners wish to form a Limited Partnership, they will need to complete a Certificate of Partnership. Limited Partners have limited management input, but, in turn, they take on limited liability for legal claims. The details of a Limited Partnership are spelled out in the Articles of Partnership. Here, each party enters into an agreement concerning the purpose of the partnership’s business, the level of contribution demanded of each partner, how the partnership’s profits will be divided, how the partnership will be managed, and under what circumstances partnership rights can be transferred and sold. Certificates of Partnership are typically filed with the Secretary of State in the state in which the partnership will do business.

Limited Liability Company (LLC): Certificate of Organization

A Limited Liability Company (or LLC) is a company that can be owned by one or more people, known as members. As the name implies, the LLC limits the amount to which individuals are personally liable, protecting business owners from litigation. LLCs also offer some flexibility on taxation, making them a very popular choice.

In order to form an LLC, business owners must file a Certificate of Organization with the Secretary of State. In some states, this document is also known as the Certificate of Formation. Each state’s filing requirements may vary to some degree, but the overall process is similar. After filing the required paperwork, the state sends back the legal certificate, which states when the LLC was duly formed and recognizes it as a legal entity within the state.

Commonly required information on the Certificate of Organization includes:

  • LLC name. Most states require that your business name include the designation LLC or other similar wording.
  • The effective date of the LLC.
  • The name and address of the registered agent working on behalf of the LLC.
  • The company’s principal office address or the address of the registered agent.
  • Whether the LLC is managed by members or managers.

In some states, the required documentation is known as Articles of Organization, rather than a Certificate of Organization, but there exists very little practical difference between the two.

Interested in learning more about how to decide which entity management software is best for your organization? Download our entity management software buyer’s guide and see how you can best fit your entity needs.

Corporation: Articles of Incorporation

A corporation is perhaps the most complex business type, representing an independent legal entity owned by shareholders, rather than a group of partners, members or sole proprietors. Corporations are able to take advantage of their ability to raise capital through the sale of stock, pay taxes separately from their owners, and protect their shareholders from the responsibility of debts or the threat of legal action.

To initiate a corporation, business owners must file Articles of Incorporation with the Office of the Secretary of State in the state in which the business chooses to incorporate. The Articles of Incorporation outline the governance of the corporation and the corporate statutes under which the corporation operates. The articles may vary from state to state, but typically they include:

  • The name of the corporation.
  • The name and address of the registered agent working on behalf of the organization.
  • The type of corporate structure chosen by the organization, e.g., profit corporation, non-profit corporation, professional corporation
  • Name and address of initial board of directors
  • Number and types of authorized shares
  • Duration of the corporation
  • Name, signature and address of the incorporator, who is in charge of setting up the corporation.

 Professional Licenses

In addition to formation documents, many states require specific licenses in order to conduct business in a particular trade. The occupations that require licenses vary widely, so it is best to check with local restrictions if you are at all uncertain. For example, those in construction work, such as builders, carpenters and plumbers, are typically members of licensed professions, as are doctors, lawyers, private investigators and child-care providers. A growing number of states have added massage therapists to that list, and in some states, like Texas, geoscientists and interior decorators are license-only occupations. For details about which businesses require specific licensing in your state, consult your state’s business services office.

Local Licenses

One last bit of red tape before you can get your company off the ground: Make sure you have filed any appropriate paperwork necessary for local licensing. This may be issued by the county or the city in which your business is located and can involve such details as zoning or alcohol sales. For example, your business may need a special license in order to conduct business within the city limits or within a specifically zoned neighborhood. Business insiders are advised to pay particular attention to sales tax permits within their specific area. Most states and many local governments assess a tax on the sale of many different goods and services. In order to be fully prepared, verify whether your business is obligated to collect these taxes, and then obtain the necessary permits. These permits and other local licenses can be found at the county, township or city clerk’s office.

Technology Facilitates Entity Documentation

Whether you are a sole proprietor just getting your business off the ground or a well-established financier looking to start another corporation, Blueprint can help you stay on top of your business needs. For more information on how Blueprint can help you launch your next company, contact us today.