Do LLCs Maintain & Record Minutes?

By River Braun, J.D.

Do LLCs Maintain & Record Minutes?

By River Braun, J.D.

A limited liability company (LLC) is a common business entity used by small- to medium-size companies for its ease of formation and flexibility of operations. It may consist of a single member (owner) or have multiple members. In addition, other corporations and business entities may be members, making it another good choice for companies that want to branch out while keeping different operations under different entities.

Coworkers sitting around a table talking

One advantage of using this type of business entity is that you typically are not required to maintain and record minutes of meetings as you would with other business entities. For someone who wants the protection of a business entity without the paperwork and government requirements of a corporation, an LLC is likely the ideal choice.

Flexibility and Protection Without Formality

An LLC is fairly easy to organize and operate, and are governed by state laws. However, an operating agreement, much like a partnership, can be drawn up to govern the day-to-day operations of the company. The flexibility of using contract law to structure the business relationship gives the members freedom and flexibility to operate the business in a manner that is beneficial to them.

The operating agreement sets forth the responsibilities and rights of members. The agreement can be drafted to give members the same authority or divide the authority however they desire. Members are under no obligation to meet periodically and record the minutes of those meetings. The requirement of regular shareholder and board meetings required to maintain a corporation can be cumbersome and time-consuming for a small business, making an LLC a better option in this regard.

State-Specific Formalities and Rules and Limits on Liability Protection

Because LLCs organize and exist under state laws, the members should consult with their Secretary of State or other state agency to determine if their state has any formalities and rules with which their business must comply. For instance, some states require LLCs to file annual reports and maintain a list of members, managing members, and managers with the state. Most states provide detailed instructions for forming these types of businesses on their websites. To avoid issues or problems, members should research the requirements in the state in which they intend to form the LLC.

Like a corporation, an LLC protects members from personal liability for business debts. However, the courts can "pierce the corporate veil" and sue members for actions taken by the business if the decision is justified and reasonable under the law. To reduce the risk that a judge will pierce the corporate veil, keep business and personal matters and finances completely separate and maintain detailed and accurate records.

Even though LLCs are generally not legally required to maintain and record minutes, it is highly beneficial to do so. Maintaining accurate records decreases the risk of members being held personally liable for any of the business's debts. To make recording these minutes easier, keep a simple format and stick to it, as it's not necessary to include a bunch of legal lingo.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.