Hi, this is Lee Phillips.
I'm an attorney.
Don't hold that against me.
I want to talk to you for a minute about the articles
of incorporation, if you're a corporation, or the articles
of organization or the certificate of organization
or whatever your state calls this thing.
These are the papers that you file to create the corporation
or to create the LLC.
You file them with a state.
Actually, the corporations and LLCs
are creations of the state.
It's your state, and it's giving you permission
to operate under these rules in order
to have your company give you limited liability,
for example, and taxes, structures, and all that stuff.
So you have to have the proper articles of incorporation
and articles of organization.
And you need to read them and understand them.
Now, if you go to the lawyer, a lot of the lawyers
will give you four, five, six pages of these things,
the articles of corporation.
No, no, no.
The states require a very minimal amount of information
in order to set up the corporation of the LLC.
In the old days, the states used to require
that you have $1,000 or $2,000 or $5,000
in the bank account of the company.
Well, that's not a requirement anywhere anymore,
that I'm aware of anyway.
So these rules and regulations associated
with the articles of incorporation
or the articles of organization have been parried back a lot.
You will actually file the articles
of incorporation, the articles of organization
on the state website.
They're going to ask you a few questions-- the name
of the company, the address of the company--
and you have to have a registered agent in the state.
So they need the registered agent's address and phone
number and all of that stuff.
That has to be a physical person within the state
that they could get ahold of, that the sheriff
can come give a lawsuit to.
So you need a physical person.
If you don't have anybody in the state
where your incorporating or forming your LLC,
there are lots of guys that will be
more than happy to take your money
and act as your registered agent.
So you list the registered agent.
You list the home office.
You list this sort of stuff.
Don't give any more information to the state
than is required at a minimum because that's
public information.
Anybody can see what you filed in order
to create your corporation or your LLC.
Now, you're going to have a rule book that's
going to be a lot longer than the articles of incorporation
or the articles of organization.
And that rule book is going to tell you how you're
going to operate the company.
In a corporation, that's called bylaws.
In the LLC, it's called the operating agreement.
We'll talk about those in another one of these YouTube
series.
But for now, make sure that you understand
what each thing that they're asking is
and that you supply the proper answers
on the articles of incorporation or the articles
of organization.
And make sure you don't give them
any more information than is actually required there.
They're going to often ask, what's
the nature of the business?
And you're going to say, it's a retail business.
Or, it's a consulting business.
You can make that pretty broad, and you probably ought to.
Some attorneys say, well, just say any lawful activity.
No, that'll come back to bite you sometimes.
I've seen it happen in a number of court cases.
State that this is real estate investing company.
State that it's a consulting company or a chemistry
laboratory or whatever it is.
And that's usually in the articles of incorporation
or the articles of organization as well.
So the first step is understand what is required by the state,
give them the minimum amount.
Oh, and then you have to pay your fees, of course.
And you file your papers with the state.
And that makes you a company in the state's eyes.
Now, that doesn't mean that you're going
to get the limited liability.
It doesn't mean you're going to get the tax structure you want.
It doesn't mean anything.
It just means that you now have a company with the state.
And in one of my 27 formalities that I go through
on corporations and LLCs, one of the first ones
is, let's make sure we understand what's
in the articles of incorporation or the articles
of organization.