LLC Minutes & Maintenance Issues

[Bill Gulley]

A recent thread pointed out the need for an Operating Agreement which led to maintenance rquirements of an LLC.

Not only do members need to have an Operating Agreement but the corporation needs to be maintained.

Minutes of Meetings will provide evidence of how buisness is conducted through your LLC. The best way for you to lose the liability protection provided by your LLC is to mismanage the company, allowing it to remain dormant and inactive.

But, keeping minutes of meetings of a one member LLC seems silly, but the LLC really isn't you so much as a seperate corporate beast that should be fed.

Any time your company acts in a significant transaction, like buying a property, such actions need to be authorized.

While meetings may not be specifically required by law for an LLC, an LLC is a corporate entity and meetings are required for corporations. Robert's Rules have been adopted my some states as to how meetings are to be conducted, adopting the outline will show a formal attempt to conduct your business.

That said, how can we make it easier to maintain an LLC and conduct meetings as well as recording meeting activities in the minutes?

Really, I used some standard verbage to show meetings were conducted in various corporate stuructures, just going through the motions, but when significant buisness was conducted anotations were made.

In about five minutes a month, minutes could be maintained without much buisness activity.

It may take longer when significant busienss is conducted, so what do you consider significant?

I'd suggest "significant" is outlined in a good Operating Agreement, major purchases, entering contracts, withdrawl of money above amounts set for normal business expenses, admission or withdrawl of members, obtaining insurance policies, making claims against others or addressing claims against the company, letting contracts, hiring an attorney or accountant, and engaging in any business not specifically described in the Articles of Incorporation.

In such matters, common sence must prevail, what is usual and customary may not need to be addressed, say with letting contracts or hiring professionals, sending a maintenance guy over for a minor repair is usual and customary in rentals, hiring a roofing contractor to replace a roof is significant.

BTW, a roofing job might be a good example why the company should approve the work, if there is an accident, if your company did not approve the work the damages could end up being on you, while I don't have a specific case, that example was given to me by our attorney, just passing it along and I do see such being an issue.

What else do you think should be considered and how can it be simplified?