Yearly Maintenance Check-in: LLC Identity Practice Checklist
Mar 08, 2021
By: Craig Watrous
While it is not difficult to maintain limited liability company formalities, 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. This maintenance is especially important after last year presented significant changes and difficulties for many businesses. Here is a general summary of important points for your business to be sure to address to remain current in 2021:
- Keep up Annual Report filings with the Secretary of State where your LLC is incorporated. In Colorado, this can all be done online. Be sure to keep all addresses and contact information current. Here is the link to the Colorado Secretary of State.
- 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.
This is not designed to be a comprehensive list, but rather a quick reminder of some of the key issues and documentation you should be preparing and maintaining for the independent identity and legal 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 or need any assistance with any of the above, please give us a call.
(MLMW is a business, real estate, finance, and litigation law firm. Craig T. Watrous is a Colorado business attorney with MLMW based in Denver, Colorado. Craig regularly represents limited liability companies. Craig can be reached at firstname.lastname@example.org .)