LLC Corporate Resolution Form: Everything You Need to Know
An LLC Corporate Resolution Form is a document that describes the management and decision-making processes of the LLC.3 min read
2. Types of LLC Legal Forms
Updated July 13, 2020:
An LLC Corporate Resolution Form is a document that describes the management and decision-making processes of the LLC. While LLCs are generally not required to draft a resolution form, it is highly beneficial and important for all businesses to draft corporate resolutions. The most common type of LLC corporate resolutions is the LLC Operating Agreement.
LLCs are required to file the articles of organization, which specifies the business name and address, and other high-level information, such as the member names/addresses along with how the LLC will be managed. However, some states, including Washington and Florida, require an LLC to keep a written statement that includes membership information, i.e. capital contribution.
All states allow LLCs great flexibility in terms of management. Therefore, an LLC can be either member-managed or manager-managed. A member-managed LLC means that all members of the LLC have authority to bind the company to contracts; the members all have daily oversight over all business decisions. However, if a business operates as a manager-managed LLC, then that party will have the authority, but the members will not have such authority aside from voting rights over significant business decisions.
The LLC resolution is used to document the management structure, along with the rights and responsibilities of all members. In this manner, the corporate resolution form can prevent potential future legal disputes among members. Some issues that can be included in the agreement are the process regarding dissolution, what happens if a member wants to sell his or her membership interest, what happens if a member dies or goes bankrupt, voting rights, the responsibilities for each member, how often meetings will take place, whether or not meeting minutes will be kept, etc.
Benefits of an LLC Corporate Resolution Form
LLCs offer many benefits, including legal and tax benefits, similar to that of a corporation. However, one key difference between the corporation and the LLC is that the LLC offers enhanced management flexibility over a corporation. The members of the LLC can adopt certain corporate formalities, i.e. using a corporate resolution form. As previously noted, while the corporate resolutions are optional for an LLC, they are highly advisable.
While shareholders and investors operate a corporation, an LLC is a private business structure. Therefore, the members can negotiate with one another regarding the decision-making processes ad other business matters.
Such processes can be laid out in a corporate resolution form, usually known as the operating agreement. The agreement can also specify whether or not the decision-making is to be agreed upon by all members or a majority of members.
The operating agreement must be signed by all members, and kept on file for as long as the company is in business. This agreement is a legally binding document that can be used in the event that a legal dispute arises among members. The agreement should also be provided to all members, who can keep a copy on hand. Some financial institutions even ask for the formal agreement before agreeing to open a business bank account for the LLC.
Types of LLC Legal Forms
There are several different LLC legal forms that you can use to form and maintain your LLC. Some of these forms include:
- Articles of Organization, which is generally required by most states
- Meeting minutes. While most states only require corporations to keep meeting minutes, it is a good idea for all businesses, including LLCs, to keep meeting minutes of all meetings that take place, particularly the initial meeting after the LLC was formed
- LLC Operating agreement. This is the main corporate resolution form. There are a couple different types of operating agreements that can be drafted, including a manager-managed operating agreement, member-managed LLC operating agreement (for multi-member LLCs), and a single-member LLC operating agreement.
- LLC Capital Contribution. This document identifies the contributions of each member. While the operating agreement can specify such information, if you choose not to draft an operating agreement, this document should be drafted to identify such information.
- LLC membership certificate, which is given to each member in an LLC
If you need help drafting an LLC corporate resolution form, or if you need help with drafting a robust LLC Operating Agreement, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.