The primary difference between Corporations and LLCs is that Corporations are required to hold an annual shareholders meeting while LLCs aren’t. This is due to the fact that corporate management decisions are voted on by participating members or officers, while LLCs have more latitude in management decisions and company organization.
Most business owners choose to form a limited liability company, or LLC, instead of forming a corporation because the formal requirements for LLCs and much simpler. LLCs offer business owners protection from the company’s liabilities, but have less startup costs and complications than forming a corporation. LLC company formations have been increasing in popularity ever since the option became available for business owners.
Annual Meetings for LLCs
While states don’t require LLC owners, also called members, to hold annual meetings or keep minutes. However, the flexibility of the organization’s structure allows members to create an operation agreement, allowing for the option to hold annual meetings and requiring minutes to be kept for those meetings.
Annual Filing Requirements for LLCs
Virtually every state requires an LLC to file an annual report, or a semi-annual report. The report requires that the LLC to list the name of the organization, the street address of the organization’s place of business, as well as names and addresses of managers and members. The document also lists any changes in the businesses’ registered agent and its registered office. There are no requirements that minutes be included with an annual or semi-annual report.
LLC Companies Provide Owners Substantial Benefits
It is true that no state requires that members of an LLC hold annual meetings or keep minutes, but there are substantial benefits for members if meetings are held, and records of minutes are kept. Should the corporation be sued by a creditor who feels it may be profitable to pierce the corporate veil in order to hold the members of the LLC personally liable for business related debts, holding regular meetings and keeping a record of the minutes may provide compelling evidence to support that the LLC is indeed a valid organization. In addition to this, keeping records of minutes could provide important evidence should a dispute between members ever arise that leads to litigation. Most importantly, holding annual meetings provide an opportunity for LLC members to have their say regarding issues facing the organization.
How to Maintain Records of Annual Meetings
The minutes of an LLC meeting should be composed similarly to those of a corporation. The minutes should include the time, date, and address where the meeting is held. Any votes taken by members should be recorded along with status updates regarding the businesses long term goals. Additionally all members present for the meeting should sign the minutes upon the meeting’s conclusion.
Beware: LLC Annual Meeting Scams
Some online companies incorrectly claim that states require LLCs to file minutes with their annual or semi-annual reports, and offer to charge a small fee for assisting LLCs in filing these reports. Minutes of annual meetings are easily kept by members of LLCs, and assistance with filing an annual or semi-annual report is rarely necessary since the forms are generally simple and straightforward.
Templates for annual meetings are available at a fraction of the fee charged by many of these unethical companies and generally don’t require as much capital as generally required when forming an LLC.
LLC minutes are not required to be filed with the annual report or semi-annual reports that LLCs files. Keeping minutes for these meetings are optional precautionary measure taken by members of LLCs to ensure they are never held responsible for debts incurred by the business.