New Year’s Resolution 2016 Maintaining LLC Identity Practice Checklist Jan 04, 2016
New Year’s Resolution 2016
By: Craig Watrous
Maintaining limited liability company formalities is not difficult, but it does require periodic review and attention. Even the most careful LLC managers and members can use an occasional word or two of advice on how to guard and maintain LLC identity. Here is a general summary of important points for your business to be sure to address in 2016:
- Keep up Annual Report filings with the Secretary of State where your LLC is incorporated. In Colorado, this can all be done online. Here is the link to the Colorado Secretary of State: http://www.sos.state.co.us/pubs/business/businessHome.html?menuheaders=2
- Operate only under the registered LLC name or the registered trade name. If a trade name has not been registered, then it may not be valid.
- Make sure that third parties dealing with the business know that it is in fact an LLC. Make sure that all company agreements are entered into by the company and not personally guaranteed by the party signing those agreements.
- If your company uses a trade name, maintain trade name filings with the relevant Secretary of State.
- Do not give personal guaranties or otherwise risk personal liability. Do not sign contracts personally, sign only as a manager/member on behalf of the LLC or you may be inadvertently signing personally and risk personal liability.
- Keep all financial transactions involving the LLC separate from personal financial matters. Do not co-mingle your personal assets with company assets.
- Carry appropriate insurance for company vehicles, property and company assets. Carry appropriate liability insurance for the company’s acts.
- Document any indebtedness owed to members. This should be documented in the LLC minutes and filed in the LLC minute book.
- Document significant company capital transactions. This should be documented in LLC minutes and filed in the LLC minute book.
- Hold at least one annual meeting. Maintain at least annual LLC minutes confirming the members, electing manager(s) and documenting major LLC transactions.
- If a member leases property to the company, make sure that the lease is in writing, commercially reasonable, and that the terms of the lease are actually followed.
- Keep all out-of-state filings current like: registrations to do business, foreign entity registrations, franchise taxes and trade name and trademark filings.
This is not designed to be a legal opinion or comprehensive list of LLC formalities, but rather a quick reminder of some of the key issues and documentation you should be preparing and maintaining for the independent identity and status of your limited liability company. Failing to establish and keep formalities in place can remove limited liability protection for the members, making them potentially personally liable for company disputes. If you have any questions about your company and its LLC records or need any assistance with any of the above, please give us a call.
(Mallon Lonnquist Morris & Watrous, PLLC, is a business, real estate, finance, and litigation law firm. Craig T. Watrous is a Colorado business attorney with Mallon Lonnquist Morris & Watrous, PLLC, based in Denver, Colorado. Craig regularly represents limited liability companies. Craig can be reached at firstname.lastname@example.org.)