An LLC is one of the easiest business types to form. That said, there are a few confusing elements. One confusing point is the distinction between organizers and members. In this brief guide, we’ll cover the essentials of what organizers are.
What is an organizer?
The LLC’s organizer is the one responsible for setting up the LLC. Organizers fill out the paperwork to form the LLC, sign it, and pays any necessary fees. Once the LLC is formed, the organizer essentially relinquishes control of the entity to the LLC’s members. This is similar to how a corporation’s initial incorporator relinquishes control to the initial board of directors.
If the organizer is not a member, then the members can entrust the organizer with additional tasks. For example, some LLCs entrust their organizer with the tricky task of drafting the operating agreement.
Who can be an organizer?
Most states require that the organizer is a legal adult. This is the most common requirement, but some states have additional requirements. You should check your state’s guidelines prior to appointing your organizer.
Other than that, an organizer can be practically anyone, including family members, a registered agent, and even another business. The organizer must have the authorization of the members (i.e., the owners) to serve as the Organizer.
What’s the difference between an organizer and a member?
The distinction between an organizer and a member is important. An organizer can be (and often is) a member of the LLC, too. The organizer does not have to be a member, however.
The members are the actual owners of the business. They receive a cut of the business’s profits, and they enter into the business together. Technically, the state is usually not aware of the members that comprise an LLC. Here’s why: the form to create your business, the Articles of Organization, lists the name of your organizer(s). Your members are never listed on a form filed with the state.
There would not be enough space to list all your members on your Articles of Organization. The only place that you must list your members is your Operating Agreement. This is an internal document that does not have to be filed with the state. As a result, the state doesn’t necessarily know how many members are in your LLC.
The primary responsibility of an organizer is to file the initial paperwork for the LLC. If the organizer is not also a member, they will not have any additional responsibilities. They also would not get profits.