Choosing a Business Form 231Corporations also adopt bylaws, which are not filed with the state but are
available for inspection by stockholders. These are usually fairly standard docu-
ments describing the internal governance of the corporation and setting forth
such items as the officers’ powers and notice periods for stockholders’ meetings.
LIMITED PARTNERSHIPS
As you might expect, given the limited partnership’s hybrid nature, the law re-
quires both a written agreement among the various general and limited part-
ners and a Certificate of Limited Partnership to be filed with the state, along
with the appropriate initial and annual fees. The agreement sets forth the part-
ners’ understanding of the items discussed earlier regarding general partner-
ships. The certificate sets forth the name and address of the partnership, its
purposes, and the names and addresses of its general partners. In states where
the Revised Uniform Limited Partnership Act has been adopted, it is no longer
necessary to reveal the names of the limited partners, just as the names of cor-
porate stockholders do not appear on a corporation’s incorporation documents.
LIMITED LIABILITY COMPANIES
The LLC is formed by filing a charter (e.g., a Certificate of Organization) with
the state government and paying a fee (usually similar to that charged for the
formation of a corporation). The charter normally sets forth the entity’s name
and address, its business purpose, and the names and addresses of its managers
(or persons authorized to act for the entity vis-à-vis the state if no managers
are appointed). The same broad description of the entity’s business which is
allowable for modern corporations is acceptable for LLCs. The members of
the LLC are also required to enter into an operating agreement that sets forth
their rights and obligations with regard to the business. These agreements are
generally modeled after the agreements signed by the partners in a general or
limited partnership.
OUT OF STATE OPERATION OF SOLE
PROPRIETORSHIPS AND PARTNERSHIPS
Partly as a result of both the Commerce clause and Privileges and Immunities
clause of the U.S. Constitution, states may not place limits or restrictions on
the operations of out-of-state sole proprietors or general partnerships that are
different from those placed on domestic businesses. Thus, a state cannot force
registration of a general partnership simply because its principal office is lo-
cated elsewhere, but it can require an out-of-state doctor to undergo the same
licensing procedures it requires of its own residents.