A corporate resolution is an agreement between owners to make changes in the business.
This article addresses when you need a corporate resolution for an LLC and outlines what needs to be included.
There are times when Limited Liability Companies (LLCs) need corporate resolutions. A corporate resolution is an agreement between owners (typically on a board of directors) to make significant changes to the company, decisions about adopting new procedures or take on specific activities that were not outlined in the initial incorporation documents.
LLCs don’t require corporate resolutions for major decisions. LLCs don’t have shareholders, a board of directors, board meetings, or need to be board accountable like corporations. An LLC can even be a single individual. An LLC provides limited liability protection, so the owners’ personal assets are not at risk if someone files a lawsuit against the LLC.
However, LLCs with multiple owners, known as “members,” may decide to create a business resolution despite not having a corporate board meeting. Corporate resolutions can be useful if an LLC needs to make decisions that the members didn’t originally anticipate.
Corporations with a board and board chairperson use corporate resolutions to replace annual meetings and ensure that all shareholders are on the same page about the new direction or action not included in the company’s bylaws or articles of incorporation. The corporate resolution shields the business from lawsuits by dissenting shareholders.
Typically, the board of directors might introduce a proposal and vote on it. Whatever the board’s decision, it’s recorded in the board meeting minutes. That information, signatures, a list of board members, and other required internal documents would be filed with the state. Filing the board decision as a corporate resolution proves that shareholders signed off on the action.
LLCs with multiple members can use business resolutions in a similar manner to traditional board-driven corporations. The LLC members can use corporate resolutions to document their decisions in case they disagree later. Unlike corporations, LLCs don’t need to file business resolutions with the state.
Single-member LLCs (SMLLCs) can also use business resolutions, even though there is no chance of disagreement among the members. Some LLC corporate resolution examples are:
Although LLCs don’t need to file business resolutions with their respective states, it’s always best to check your state’s requirements to ensure that the LLC creates legal business documents.
Since the purpose of an LLC’s corporate resolution is to prove that all members were aware of the decision made (for multiple-member LLCs) and provide a paper trail of the decision, it can be written like a meeting’s minutes or a detailed statement of the action.
Once the legal document has been written, it’ll need to be passed. Most LLCs have provisions about how many members must approve the resolution for it to be passed (for example needing a majority vote).
It’s important to note that the form must state that the members or managers run the LLC, the person signing is a member or manager, and that they are allowed to legally bind the LLC according to the company’s articles of incorporation.
Corporate resolution documents will have different requirements depending on state laws, but some pieces of information are universally applicable. An LLC’s corporate resolution form will need to include the following:
We here at ZenBusiness have everything you need to help you start your LLC today. Whether you’re looking for guidance on writing corporate resolutions or need to start from scratch, we’re here to ensure that you and your business hit the ground running.
Disclaimer: The content on this page is for informational purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
For single-member LLCs, corporate resolutions are legal documentation of important business decisions or meetings. They provide specific information on the scope of the change or transaction and when it took place.
Single-member LLCs do not need resolutions, but they can still come in handy in certain situations, like if the company must defend itself in court. Documenting changes or actions not covered in the original bylaws or articles of incorporation can help an LLC protect itself from lawsuits or judicial investigations.
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