All 50 states and the District of Columbia allow business owners to register a limited liability company within its jurisdiction. No laws exist that require you to create the LLC in a specific jurisdiction, such as where you reside or the state you anticipate a majority of business operations to occur. However, when you determine where to form the LLC geographically, the LLC is subject to that jurisdiction’s laws for its perpetual existence.
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As a result of the widespread adoption of the Revised Uniform Limited Liability Company Act, each state has similar LLC formation requirements. Although some states may require additional information, business owners must provide at a minimum the business name of the LLC, its principal business address, and the name and address of the person or entity it authorizes to accept legal documents on behalf of the LLC. For example, owners who create an LLC in New York can fill in the state’s standard two-page articles of organization and submit it with a $200 fee to effect legal formation.
Most states require LLCs formed in a foreign state to apply for a certificate of authority or a similar document in order to receive the same governmental protections that domestic LLCs receive. You must file documentation in each state that you conduct business in. Failing to provide the certificate does not preclude you from entering into business transactions within the state. However, if a contract dispute or other disagreement arises between the LLC and a resident of the state, you may be denied access to that state’s courts to resolve the issue. Additionally, your home state may lack jurisdiction over the defendant and your case may never be heard.
After creating the LLC, the business must notify the jurisdiction in which it was formed of any fundamental changes that subsequently occur. In the event you designate a new agent to accept legal service of process, you must amend the formation document. Delaware provides members a standard form that can effectuate any change to the formation document, including the designation of a new agent. The state charges a $200 fee for each amendment the LLC makes. The state imposes the same document and fee requirements on foreign LLCs that previously register the business in Delaware.
In the absence of an operating agreement, the laws of the state in which you create the LLC will govern the operations of the LLC. You must be cognizant of this when choosing which state to create the LLC in. For example, an operating agreement may require only a simple member majority vote to approve the admission of a new member. However, if it is silent on issues relating to new members, many jurisdictions require unanimous approval of members before the LLC can issue a new membership interest. Additionally, most states do not require an LLC to make profit distributions to its owners. Members are unable to require the LLC to distribute earnings in the absence of unanimous member consent.