In the world of multi-member LLCs, member meetings give all members, including those who may not be routinely involved in the running of the company, an opportunity to participate in major decision-making. In the world of SMLLCs, however, this reason for holding a member meeting loses much of its relevance. Because a SMLLC has just a single member, who in turn usually is running the company, there often is no issue of notifying other people about big decisions. Similarly, consent actions and resolutions can seem to make more sense for multi-member LLCs than for SMLLCs. For multi-member LLCs, a primary purpose of resolutions is to give all members a document to refer to in case they later find themselves in disagreement. For a SMLLC, however, there is just one member, and so a disagreement, at least among members, is not possible.
There are, however, other reasons why it might be useful for your SMLLC to hold meetings or at least use written resolutions. First, by observing these kinds of formalities, you might help protect the limited liability status of your company if it comes under scrutiny in court. Strictly speaking, courts are mainly concerned about “economic separation” of a SMLLC from its owner, and not about whether the company closely observes “corporate formalities” (tasks legally required of corporations, but not LLCs, like holding annual shareholder meetings and keeping meeting minutes). In other words, courts would look at whether you are using your SMLLC’s checking account to pay personal expenses, or using a truck registered to your SMLLC mainly for personal road trips, but probably wouldn't be so concerned that meetings aren’t being held and major decisions aren’t being documented. Nevertheless, even for a SMLLC, a court might take into account formalities such as meetings and resolutions in deciding whether the company was truly separate from its single owner, and whether the owner is entitled to limited liability protection.
Second, there may be cases where an outside party, such as a lender, insurance company, or government agency, would ask that you produce a written resolution as proof that you have authority to take certain significant action for your company. While a copy of an operating agreement often will suffice, in cases where there is no operating agreement, or for certain types of transactions (for example, the sale or purchase of real estate), a specific, written resolution may be required.
Third, your SMLLC may rely on the help of outside advisers, such as attorneys, accountants, financial consultants, or other experts, when making business decisions. On some occasions, you may want to hold a formal meeting that includes one or more of these other people. In those instances, even though the other people won’t have the authority of a company member, it nonetheless can be useful to keep meeting minutes so everyone has a record of what was discussed.
As a final reason, if you hope to attract outside investment in your business, keeping written records of major decisions may help show potential investors that you’re taking your business seriously.
To be clear, most business decisions, including day-to-day decisions, are made without resolutions or other documentation. With a SMLLC, you’d only use a resolution to document the most important business matters or actions such as:
The content of a resolution is flexible and, of course, will vary depending on what action is being taken. For example, a resolution to sell real estate typically would include the property address, the price and other terms of the sale, and a statement that someone (such as the single member of the SMLLC) is authorized to execute all documents necessary to complete the transaction under the stated terms. If you would like more detailed information on using resolutions, including a host of resolution templates, check out Your Limited Liability Company: An Operating Manual by Anthony Mancuso (Nolo).
For more information about running a single-member LLC, check out the other articles in the SMLLC section of the Nolo website or pick up Nolo's Guide to Single-Member LLCs: How to Form and Run Your Single Member Limited Liability Company by David M. Steingold (Nolo).