Since a principal function of the Secretary of State of the various states is the formation of new business entities, we present common concerns which are normally associated with llcs (or corporations), whatever the state (and regardless of whether or not that particular state follows the normal practice of entrusting these matters to the Secretary of State):

CONSIDERATIONS IN FORMING AN LLC :

Securities Laws, Proper Formation Issues

Pleasing the state agency responsible for llc filings is only part of the battle: a new entity, even if its articles are filed by the state agency, must comply with the state securities ("blue sky") laws, which are almost always administered by a different state agency, before issuing its stock to the stockholders or membership interests to the members. Moreover, clearance by these state agencies is no guarantee that what has been done will pass muster in the courts in the event of litigation between private parties. Courts occasionally disregard the corporate entity and find the participants individually liable for company debts, or find that the participants have civil (or perhaps even criminal) liability for violation of the securities laws.

Taxation

Once again, though an LLC can be taxed in different ways, there is really only one kind of for-profit, state-formed limited liability company. Organizer(s) file Articles of Formation (generally speaking, although the exact name may differ in the various states) and pay the requisite state fees and prepaid taxes with the appropriate state agency to form a limited liability company. How that limited liability company is taxed by the Internal Revenue Service depends upon what tax elections the LLC makes.

Separate Legal Existence

A limited liability company which is properly formed and maintained has separate legal existence distinct from its members.

Members

Members own the limited liability company and run it (in the case of member-managed limited liability companies).

In the case of manager-managed limited liability companies, day-to-day operations are conducted by the managers, who are selected in the manner set forth in the articles and in the operating agreement (again, different names are sometimes used for these documents in the different states). Even if day-to-day operations are conducted by managers, there are a few matters, considered particularly important, where member approval is required. Aside from these matters, LLC management in the manager-managed limited liability company is normally vested in the managers. In member-managed limited liability companies, the form of a limited liability company most clearly resembles the traditional partnership, but with the significant difference of limitation of liability.

Officers

The members can provide for officers, and delegate to those officers such duties as they deem fit. This is in keeping with the general concept that a limited liability company can be tailored, in most instances, to be just what its members want it to be