The lack of LLC meeting minutes requirements is one of the reasons why many small business owners choose this type of business entity. Unlike corporations where the board of directors and shareholder meetings are required by law, a limited liability company has no such compliance requirements.
To clear up any confusion regarding whether you need to conduct formal meetings for your LLC and record the minutes, we’ve put together this handy resource, so that you can easily find out everything you need to know about LLC meeting minutes.
What Are LLC Meeting Minutes?
Meeting minutes is just a specialized term for recording everything that happened during a meeting. One of the attendees is designated to take the minutes and they’ll diligently record the discussions that took place and any subsequent business decisions made by members of the LLC.
The minutes are meant to serve as a written record of the meeting. They’re typically shared with all the attendees before the meeting’s end and once they’re approved, a copy is placed in the records for safekeeping.
Since states don’t require LLCs to hold a shareholder meeting as they do for other entities like corporations, there’s generally no need for LLCs to record meeting minutes, but it’s up to the members if they’d like to make such meetings mandatory.
Is It Required to Keep LLC Meeting Minutes?
There is no requirement by any state in the US for LLCs to hold annual meetings or keep minutes. That’s the primary reason why a limited liability company remains the preferred business structure for many business owners. They can benefit from the enhanced liability protection that it provides without having cumbersome compliance requirements like other structures.
Such meetings are out of the question for single-member LLCs to begin with since there won’t be anyone to meet with as the entity is only going to have one member. However, for multi-member LLCs, it’s up to the members if they want to mandate annual meetings.
If they feel that these meetings would help them run the business more effectively, this remains an option available for multi-member LLCs. Therefore, any LLC meeting minutes requirements are laid out in the entity’s operating agreement, a document that serves as a blueprint for how the business is to be run.
What Information Should Be Included in LLC Meeting Minutes?
The LLC meeting minutes can be as detailed and descriptive as the members would like them to be. You’ll find some general information as standard on the minutes of a typical meeting. This will include the date and time of the meeting as well as the location where it’s being conducted. It will also include all attendees’ names and those absent. The meeting agenda items will be listed as well alongside a brief description.
The minutes can also cover the discussions that take place on those agenda items so that there’s a record of the deliberations that took place and the decisions that followed. If voting was conducted on any of the agenda items, the outcome would be recorded in the minutes as well. If it was decided to assign any responsibilities to people in the organization, they may be mentioned in the minutes as well.
It’s not uncommon for the minutes of the meeting to be circulated among all members so that they can see if everything was drafted correctly. Their approval for the minutes will be recorded in addition to the time when the meeting was adjourned.
Why Should LLCs Have Formal Meetings and Minutes?
Even though there are no formal LLC meeting minutes requirements that must be complied with and indeed there’s no need for LLC members to meet in the first place, there’s a case to be made for doing both. It helps streamline operations, enabling the members to run the business more effectively.
Listed below are some of the reasons why LLCs should have formal meetings and minutes:
Planning and Strategy
Members of a multi-member LLC should include the annual meeting requirement in the operating agreement as it will provide the members with an opportunity to come together and discuss how the business is being run and whether any changes are to be made. These important discussions are best had in the formal setting of an annual meeting.
An annual meeting that brings together all members of the business entity will help them develop better strategies to grow the business. They’ll sit together and brainstorm new ideas and discuss future planning so that the business can properly capitalize on opportunities. This will also help in risk management, as the members will share their views on the various risk factors the business faces so that strategies can be tweaked if need be.
The meeting’s minutes will serve as the official record. All the important discussions and decisions will be recorded and stored safely. So whenever there’s a need in the future to revisit what was discussed at a particular meeting, the record will be available, ensuring transparency in the entity’s operations.
Diligent financial management is the bedrock of success for businesses. Annual meetings will allow all members to review the financial statements so that they can get an accurate picture of the business finances.
Once everyone has that information, important decisions about budgets and finances can then be made. Healthy discussions in the meeting where members explain their points of view will contribute to securing the financial stability of the business.
These deliberations and discussions will be recorded in the meeting’s minutes. So even if things don’t pan out the way they were intended to, the participants could always look back at the minutes in future meetings, deliberate on what should have been done differently, and make any required changes.
Transparency and Communication
Members have a right to be fully aware of all business decisions being taken. It’s important to have a culture of transparency within the entity. Mandating annual meetings in the operating agreement is a great way to foster that.
Regular meetings will provide members with the opportunity to remain informed about the activities of the company, the progress it has made, the challenges that it faces, and what the next steps are to ensure growth.
When detailed minutes of the meetings are kept, members can follow up on everything that was discussed during a particular meeting, even if they were unable to attend it. This ensures that they’re always in the know and never left in the dark about what’s going on.
It’s not uncommon for disputes to arise between members. Some might not agree with certain decisions, others might feel that things must be done differently to achieve the LLC’s objectives. Meetings thus become the forum that brings them all together to address these topics.
Whether it’s conflicts within the organization that need to be resolved or any specific challenges that must be addressed, the environment of a formal meeting provides all members the opportunity to speak their minds and exert their influence on the entity’s affairs. If the LLC agreement mandates that major decisions must be ratified by a vote, members can vote on proposals in the meeting to make those decisions.
The minutes of these meetings will serve as the official record, detailing what proposals were put up, what deliberations were carried out, and finally how members voted.
Documentation for Legal and Financial Purposes
Business lawyers often recommend LLC members take minutes of their meetings because they serve as official records. They can be important documents for legal and financial purposes. For example, discussions recorded in the minutes could prove to be helpful in the event the entity faces a lawsuit.
They can also serve as a measure of confidence for investors who can see how diligently the business looks after its finances and works to ensure a solid return on investment for the people who’ve invested in it.
What Is LLC Consent in Lieu of Meetings?
It’s only sometimes possible for some, or indeed all, members to make themselves available for the meeting. There is an alternative that they can use so that even when a formal meeting can’t be conducted, all the important decisions are put on paper for proper recordkeeping.
The LLC Consent in Lieu of Meeting is a legal document that serves as an alternative to an in-person meeting. The LLC members provide their consent to the actions that would have otherwise been discussed and approved in the meeting. It’s common for multi-member LLCs to require ratification of major decisions by the members. With this, they can ratify those decisions even when a meeting can’t be held.
Any member of the LLC can ask for the consent form to be drafted if they’re unable to attend the meeting. Once they’ve ratified the decisions, their consent can’t be withdrawn without the prior approval of the other members. Upon ratification, this consent form becomes an official internal document of the LLC.
Effective Bookkeeping is as Important as Recording Minutes
Keeping minutes of LLC meetings helps promote a culture of transparency within the organization, providing members with the opportunity to voice their opinions and play a role in the success of their company.
No company can succeed unless its bookkeeping is on point. It’s the only way that the business can exercise complete control over its finances and ensure that it remains on a firm financial footing as it pursues its goals.
That’s precisely why countless businesses trust doola Books. It’s the ultimate bookkeeping software that takes the stress out of this crucial business function with expert support provided by a dedicated team of CPAs, for effortless management of business finances.
How long should LLC meeting minutes be kept?
There’s no legal requirement on how long should LLC meeting minutes be kept. It’s up to the members to decide whether they want to retain the meeting minutes for one or more years, or even for periods up to a few decades.
Can digital or electronic copies of LLC meeting minutes be used?
Since there’s no bar on how LLC meeting minutes must be recorded, members can decide for themselves if they want the meeting minutes of their LLC to be stored in digital format, though typically most will keep both physical and electronic copies.
Can an LLC meeting minutes be amended?
Minutes of an LLC meeting can be amended subject to the approval of all members. Any proposed amendments would first need to be circulated among the members and they can only be made once all members consent.
Do meeting minutes need to be signed by all attendees?
It’s a good practice to have the minutes signed by all attendees, not only to ensure that everyone’s presence can be recorded but also to signify that all attendees have approved the minutes recorded.
Do LLC meeting minutes need to be notarized?
There’s no requirement for the LLC meeting minutes to be notarized, but this is something that members can decide. Should they so desire, they can make it mandatory for the minutes to be notarized once the meeting ends.