Q.What paperwork is involved in the formation process?

A.First, the Articles of Organization (or Certificate of Organization) must be prepared and filed with the proper filing fees and state authorities. Second, an Operating Agreement and the Organizational Minutes should be prepared, along with the Membership Interest documents and investment representation letters. Third, in some states (e.g., California), the LLC must file a Statement of Information with the Secretary of State. Forth, the LLC should apply for a Federal Taxpayer Identification Number (EIN Number) by completing I.R.S. Form SS-4.

The Operating Agreement should provide: (1) whether the LLC is member-managed or manager managed; (2) the number of members; (3) the method of elections; (4) the grounds for terminating members; (5) the method for choosing managers, their terms, duties, and salaries; (6) the procedure for calling meetings as well as the times and places for meetings, (7) the procedures for handling finances, capital contributions and record keeping; (8) the voting interests and how profits and losses should be distributed; and (9)the sale and transfer of member interests.

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