LLC Record Keeping Rules
Limited liability companies (“LLCs”) are a popular entity choice for businesses because they receive the same limited liability protection as corporations, but avoid some of the more burdensome record keeping and other corporate formalities that corporations must follow. Although the level of record keeping for an LLC is less onerous than for a corporation, there are still rules you must be follow with regard to your LLC in order to maintain the LLC’s limited liability status.
What documents an LLC must keep varies according to state law. However, at a minimum, it’s a good idea for all LLC’s to maintain the following records related to the LLC’s organization and finances.
LLC formation documentation filed with the Secretary of State’s office. All LLCs should keep a copy of the formation document filed with the secretary of state’s office to create their LLC. In many states, this document is known as the LLC’s articles of organization. Articles contain--at a minimum--the LLC’s name, its purpose, its address, and the name and address of the LLC’s registered agent. Copies of any amendments to the articles should also be kept.
In addition, keep a copy of any certificate or other document from the secretary of state’s office recognizing the creation of the LLC with your formation documents.
Operating agreement. LLCs should keep a copy of the LLC’s operating agreement (and any amendments) at the LLC’s principal place of office. The operating agreement usually has the following information:
- each member’s capital contribution and agreement regarding future contributions (if any)
- how profits and losses will be distributed among members
- the right of any members to receive distributions
- the voting rights of members
- LLC member withdrawal and new member admittance procedures, and
- events that would lead to dissolution of the LLC.
If any of the above information is contained in a document other than the operating agreement, then that other document should be kept with the LLC’s official records.
Member and manager information. LLCs should maintain an up-to-date list of all their current and past members with their full names and addresses. They should also have a list of the current and past managers with their full names and addresses.
Meeting minutes. State laws do not require LLC’s to hold meetings. However, LLCs can choose to require meetings by including a meeting requirement provision in their operating agreement. If an LLC holds a meeting—whether or not required—it’s best to maintain an accurate record of the meeting with minutes that include:
- the names of the members in attendance
- any votes or decisions made, and
- any other information that would be helpful to have in an official record. Information. on the decisions made, and any other information that may have meeting requirements in their minutes.
Taxes and Finances
Income tax returns. All federal, state, and local income tax returns for the LLC should be kept for a minimum of three years, which is the time period during which the IRS can do an audit. However, there’s no statute of limitations if fraud is suspected so best practice is to keep all tax records permanently.
You should also retain records that support all expenses, credits, and income the LLC reports. The supporting records should be maintained for at least three years and include:
- business bank account deposit slips
- business credit card statements
- canceled checks, and
- paid bills.
Employment taxes. LLC’s with employees must pay employment taxes. The IRS recommends businesses retain all employment tax records for a minimum of four years. LLC’s should keep other employment tax records such as:
- employee information (name, address, Social Security number, dates of employment)
- dates and all payments to employees
- time slips or other records of employment
- W-4 forms, and
- copies of employment tax returns.
Financial records and contracts. LLCs should keep financial statements from the prior three years (at a minimum) as well as any important financial records or business contracts.