LLC Minutes: Everything You Need to Know
LLC minutes are very detailed notes taken during a meeting of the members (or owners) of a Limited Liability Company (LLC).3 min read
LLC minutes are very detailed notes taken during a meeting of the members (or owners) of a Limited Liability Company (LLC).
Initial Meeting for an LLC
It is a good idea to hold an initial meeting for the members of an LLC when the company is first formed. This meeting should help to organize all aspects of the business and make some very important, initial decisions.
Upon forming an LLC, the owner or owners will create articles of formation (or organization) and an operating agreement. If the company is a single-member LLC, an initial meeting is unnecessary as there will be no one to meet with.
Multi-member LLCs will benefit from such a meeting, however, to lay out everything stated in the previously-mentioned formation documents. This will help to make sure everyone is on the same page and aware of the plans, purposes, and expected life-span of the business. Outlining this information will help avoid future disputes.
Meeting minutes for this initial meeting will likely look a lot like the LLC's formation documents, but it is never wrong or a bad idea to over document anything when it comes to starting a business. When everything is in writing, especially in multiple places and forms, there is little room for misinterpretation or misrepresentation.
LLC Meeting Minutes
Meeting minutes should always include the following information:
- Date of the meeting
- Time and location of the meeting
- Results of any voting held
- Any updates on the goals of the LLC
- Any changes in the LLC structure, management, or otherwise
LLC minutes should be taken by the LLC secretary if one has been elected; otherwise, any member of the LLC may take the minutes.
Once the meeting has ended, all members present should review and sign the minutes. This signature shows agreement that the minutes are an accurate portrayal of what took place during the meeting.
Corporations have state laws that require the company shareholders to hold annual meetings for their annual reports. Meeting minutes are also required as a written record of what happened. Even if the corporation only has one shareholder, the company will prepare meeting minutes annually to show any changes and important decisions made regarding the corporation.
Keeping accurate meeting minutes and holding annual meetings (if not even more frequently) increases the credibility of the business with lenders and other third parties that come in contact with the company. These meetings also help to protect the liability coverage that the LLC and corporate business structures provide.
LLC Annual Meetings
As corporations are required to hold annual meetings, LLCs are not. If a corporation fails to adhere to the annual meeting and reporting requirements within its home state, they can actually lose their good standing status and creditors can sometimes overthrow the corporate liability protection and get at the assets of shareholders.
The LLC business structure is frequently chosen by business owners in order to avoid these requirements and, therefore, keep the limited liability aspect of the company more intact.
Owners or members of an LLC can actually choose to require annual meetings in their operating agreement. Again, this is not required by the state, but if the owners see annual meetings as a valuable part of maintaining a healthy company, they may want to make it a requirement. An LLC's operating agreement outlines in detail how the LLC will be run, how management will work, and even how certain issues or disputes will be handled.
An annual meeting might be held within an LLC to review any company activities that took place through the year. Multi-member LLCs and manager-managed LLCs that have less-involved members can benefit from such meetings. If a company has several members who are only tied to the business financially and don't play active roles, they may want to hold meetings to keep everyone up-to-date.
Single-member LLCs may hold meetings with their accountants or attorneys in which LLC minutes would be important, but otherwise, they will likely forgo regular meetings.
LLC minutes are vital to a smooth-running business. Well-kept notes will help to solve potential disputes among members. With all major decisions documented and changes well-communicated to all members, room for arguments is greatly lessened.
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