The state legislatures wanted to make forming and operating a limited liability company an easy and straightforward process for small business owners.  As a result, in the LLC Acts of most states, there are no legally required governance documentation requirements that are required to maintain the good standing of an LLC. There may be annual reporting or filings required to be made to the state.

However, LLC governance and LLC paperwork is practically an essential element of an LLC business.  This is because the limited liability company only exists on paper and in accordance with legal laws which are all based on written provisions.  So, in order to determine the personality of the business and, more importantly, its history and processes, such evidence must be in LLC documentation.

Having a complete set of LLC governance paperwork provides the operating history of a business and proof of authorized transactions and business decisions.  This important operational process also wards off potential misunderstandings and disputes among business owners and managers.  Recollections fade as time goes by.  So, you are protecting yourself and your business from potentially expensive he said, she said disputes later by documenting what agreements and decisions are made.

Paperwork and documentation does not have to be complicated and can be done by the business owners or managers for most all routine operational matters.  Visit the LLC Governance section of The LLC Expert for more details on meeting this important requirement for your limited liability company.

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Filed under: LLC Operating Agreement and Governance

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