Is Your LLC or Corporation Operating Properly?

January 7, 2025
Michelle OBrien

If you have an LLC or corporation, it’s always a good time to take a step back and ensure your company is operating correctly and in compliance with formalities. One of the main reasons for forming a company is to protect yourself from personal liability. However, this protection is only valid if you consistently follow the proper procedures.

To avoid unnecessary liability and maintain the separation between personal and company obligations, consider the following questions:

Organizational Documents and Formalities

  • Have you read and fully understood your Certificate of Organization?
  • Is your Certificate of Organization fully executed and filed?
  • Have you appointed the appropriate members and managers, and have they signed the required documents?
  • Have you issued and maintained a ledger of Membership Interest Certificates (if applicable)?
  • Have you kept proper notice and records of Manager Meetings, including adequate minutes for annual meetings?
  • Have you adopted an Operating Agreement, and do you understand the protections it provides?

Legal and Financial Compliance

  • Has your LLC obtained a Federal Tax ID number with the correct address?
  • Have you made the necessary tax elections?
  • Is your LLC registered and compliant in other states where it conducts business?
  • Are major company actions authorized and documented through Manager resolutions?
  • Have you kept separate books and accounts for the company and yourself, ensuring no commingling of funds?
  • Do your tax returns, company records, and books of account all align?

Proper Documentation

  • Are all transactions between you and the company properly documented with resolutions and minutes?
  • Are company documents executed under your title (e.g., manager/member) to guard against personal liability?
  • Was your LLC properly capitalized at the start, and are all major transactions documented with resolutions, notes, and contracts?
  • Do you have resolutions justifying the business purpose for any questionable deductions?

Operational Practices

  • Are you holding regular member meetings, including an annual meeting each year?
  • Are you up-to-date on all formalities and paperwork, and if not, do you know how to catch up?
  • Has your LLC adopted an expense account form that meets IRS guidelines?
  • Does your LLC have a physical address, business phone, and corresponding documentation (e.g., canceled checks)?
  • Does your LLC have its own business license and bank account?

Stay Protected with Professional Guidance

Ensuring compliance with LLC or corporation formalities can be overwhelming. The attorneys and staff at The O’Brien Law Group LLC have extensive experience helping businesses maintain their limited liability status and properly document company activities.

If your company’s formalities need attention, don’t wait. Call us today to get your business back on the right track!