What Is an LLC Resolution?

By Joe Stone

A resolution is a written document that describes some action by the owners or managers of a company. Corporations are required by state law to make resolutions, which are routinely prepared regarding the actions of the board of directors and sometimes regarding shareholder actions. Although an LLC is not required by law to make resolutions, sometimes there are practical business reasons for an LLC resolution.

LLC Basics

Business owners form their company's legal structure as a limited liability company, or LLC, for a variety of reasons, one of which is that state LLC laws do not require that the LLC be run with the formality of a corporation. This means that an LLC does not have to hold regular meetings, keep minutes of meetings or document company action in the form of a written resolution.

State Law Record Requirements

State LLC laws often include a requirement that an LLC maintain certain records at its principal place of business, such as a copy of the LLC's articles of organization or copies of tax filings. Some states, such as Washington and Florida, require an LLC to keep a “written statement” specifying, among other things, each member’s capital contribution and any right to receive a distribution of the contribution. An LLC resolution can be used to meet this record keeping requirement.

Ready to start your LLC? Start an LLC Online Now

Transaction Requirements

State LLC laws provide that an LLC can be managed by all its members or by a designated manager or managers. Although members can be managers, the members can designate a non-member as manager. Depending on the management structure chosen, it may not be apparent to an outside party, such as a bank, other financial institution or government agency, who is authorized to sign contracts or otherwise act on behalf of the LLC. In these situations, an LLC resolution is required to indicate to the outside party who is in charge. In some situations, the outside party will provide a form of resolution to use.

Documenting Important Decisions

An LLC resolution can also be used to document important decisions made by the owners, usually referred to as members. For example, the decision to enter into a long-term lease or sign a contract with significant financial risk should be documented in the form of a resolution that describes the action to be taken, that the members met and discussed the matter and that all members approved the decision. This can aid in avoiding future disputes in which a member may claim to have not been informed or had an opportunity to discuss the matter before a decision was made.

Ready to start your LLC? Start an LLC Online Now
How to Make an LLC Resolution
 

References

Related articles

How to Get a Certified Divorce Judgment

Getting a divorce can be painful and difficult; getting a certified divorce judgment is a piece of cake. A certified divorce judgment is simply a copy of the official document that the court clerk marks with a seal to indicate its authenticity. The procedures vary slightly among jurisdictions but generally involve making the request and paying a fee.

What Is the Requirement for Annual Meeting Minutes for Florida Corporations?

All corporations formed under Florida law are required to hold an annual meeting of shareholders. The annual meeting, like all corporate meetings, should be adequately documented and recorded in minutes that summarize the points discussed and action taken at the meeting. Although Florida law requires all corporations to make and keep appropriate minutes of meetings, the corporation is not required to file the minutes with any state agency.

Rights & Authorities of the Manager of an LLC

Inherent in the limited liability company structure is the right of owners, who are known as members, to participate in the management activities of the business. The jurisdiction in which you create the LLC provides the rights and authorities of an LLC manager if an operating agreement does not exist. In some instances, the rules governing managers diverge depending on whether the manager is an LLC member or a non-member employee.

LLCs, Corporations, Patents, Attorney Help

Related articles

Order of Referral to Magistrate in the Dissolution of a Marriage

Getting a marriage dissolved is not something that can be accomplished overnight. Even if you and your spouse are in ...

The Right to Sue a Board Director

Although the board of directors of a corporation wields considerable authority over corporate affairs, shareholders are ...

S-Corporation Meeting Minutes Requirements

All corporations are formed under state law and are considered C corporations when first formed. In order to maintain ...

Procedure for Filing an Uncontested Divorce in Maine

Divorces are often portrayed by the media as bitter and highly confrontational. Many couples, however, can reach ...

Browse by category
Ready to Begin? GET STARTED