Forming Limited Liability Companies
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.