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How do I Operate a Limited Liability Company?

| Apr 14, 2021 | Real Estate |

Conducting Business in the Name of the LLC. It is very important that all necessary formalities be followed to maintain the existence and activities of the LLC distinct and separate from the Members and officers, in order to ensure that such persons do not become personally liable for the liabilities or claims against the LLC. This would be true even if there were only one member. Personal property of the Members must not be commingled with the property of the LLC. You should at all times do business under the LLC name exactly as specified in the Certificate of Formation and not deviate therefrom unless an appropriate assumed name certificate has been filed. If you need legal guidance on how to operate or conduct your business, do not hesitate to contact us and we can schedule your consultation today.

Bank Accounts and Loans. Your bank and checking accounts should also reflect your LLC’s name. Any loans or banking activities should be conducted in the LLC’s name rather than your name individually, even though you may be required to endorse or guarantee the same personally. If a loan is made and the lender requires you to endorse or guarantee the loan personally, you should have the above action approved by the Members and reflect the approval in an appropriately drafted resolution which is inserted into the company’s minute book or records.

Signatures. Whenever a person signs on behalf of or for the LLC, they should add their title next to the signature so that it will be clear that they are acting as an agent of the LLC rather than in their individual capacity. For instance, if you sign a contract with just your name and do not state your relationship to the LLC next to your name in the contract, you may be held personally liable for the contract.

An example of a correct signature would be:

XYZ, LLC

By: John Doe____________________ _

Name: John Doe ________________

Title: President__________________

 

Transactions. All important transactions affecting the LLC should be documented in the minute book by minutes of meetings of the Members or other appropriate documentation, including:

All major contracts, including employment contracts, buy-sell agreements, profit sharing plans, pension plans, insurance plans, trust agreements, loans, leases, purchase contracts, and limited liability brokerage and investment accounts should be made in the name and on behalf of the LLC and with the required approval;

The establishment and adjustment of all salaries and bonuses of officers and employees, if any, of the LLC;

Issuance of additional membership interests by the Member. Any change in membership interests should not only be reported to your accountant and this firm, but must also be reflected in the membership register in the LLC minute book or other records such as a list documenting the percentage or other membership interest owned by each Member;

Restrictions on the transfer of membership interests;

Issuance of additional membership interests and purchase or sale of other membership interests in the LLC;

Acceptance of resignation, termination, or appointment of managers;

Change of LLC name, registered office, or registered agent;

Change of bank accounts; and

Any other LLC activities which are significant.

Special Meetings. Actions of the Members may be taken either at an actual meeting, in which case it is advisable to maintain written minutes of such meeting, or in the form of an unanimous written consent action embodying the desired resolutions. Unanimous written consent actions must be executed by all the persons entitled to vote on the matters contained therein. When the LLC has only a few members, it is generally simpler and more convenient to take action by unanimous written consent rather than through actual meetings.

Annual Meetings. The annual meetings must be held as provided in the Company Agreement. The time and place of the annual meetings may be changed by resolution. Any significant activities or transactions that have not previously been the subject of any special meetings should be reflected and ratified at the Annual Meetings. Please contact us if you desire assistance in helping you prepare the requisite resolutions and minutes or records to document any special or annual meetings.

Books and Minutes. The LLC minute book must be maintained and kept up to date. The LLC minute book is available for inspection by any Member. The books of the LLC should include the following items:

(1.) The LLC’s Certificate of formation, Company Agreement, Organizational Meeting Minutes, any other certificate filed with the Secretary of State, and any amendments or restatements of such certificates;

(2.) All resolutions, minutes of meetings, notices, written consents, etc., that are prepared in the future;

(3.) A current list of Members, including: (a) the date on which such person became a Member; (b) the name and mailing address; (c) the percentage or other interest in the LLC; (d) the consideration paid for the interest; and (e) the Member’s total commitment representing his or her membership interest in the LLC; and.

(4.) Copies of federal, state, and local information or income tax returns.

Records of Series Established by the LLC. All records of any series must be maintained so that the account of the assets of the series can be reasonably and objectively determined separately from the other assets of the LLC or assets of other series. This may be done by identifying assets by specific listing, category, type, quantity, or computational or allocational formula or procedure, including a percentage or share of any assets or any other objective method.

Contact us for an experienced business attorney if you need any legal assistance. Our number is 713-572-4900.

 

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