Record-Keeping Requirements for Sacramento LLCs
July 27, 2012
Limited liability companies (or LLCs) are quickly becoming the organizational structure of choice for many Sacramento small businesses. Sacramento business attorneys are frequently contacted about how to form a limited liability company, but few business owners think that further consultation with an attorney is necessary once the business is organized and up-and-running.
What these business owners fail to realize is that, although a limited liability company offers a great deal of protection from liability suits, there are many more ways in which a business organized in this manner can be susceptible to harm. In particular, there are a host of government-mandated rules that have to be followed if the business is to be allowed to continue to operate. One such requirement is that the limited liability company maintain several categories of records.
The most important record-keeping requirement for a limited liability company is that it make its incorporation papers available for inspection. In most cases, the incorporation papers for an LLC are called 'articles of organization.' In some cases, it may be termed the 'certificate of formation.' Whatever it is called, this document essentially sets out the legal existence of the organization and the rights of the organization to operate in a particular manner. It is the same document the business owner would file with the appropriate state agency to obtain permission to operate. A copy of this document must be present and accessible at all times, in case a dispute were to arise as to the legal existence of the organization.
Limited liability companies must also maintain a complete and accurate record of any business permits and licenses it has obtained from the State of California and the individual city or town in which it operates. For example, most businesses are required to obtain a permit in order to conduct sales and services on behalf of the business. This type of permit ensures that the appropriate state agency is on notice that the business is lawfully collecting sales taxes from its customers. Another typical permit is one that differentiates the legal entity name from the name under which the entity does business. For example, "ABC, LLC" might do business as "ABC Furniture Store," and the proper permit must be on file so that this relationship can be explained.
Yet another record-keeping requirement for LLCs is an exhaustive list of all contributors to the LLC. This includes any managing members, regular members, investors, and other entities that have a stake in the business. The LLC must maintain everyone's names and contact information, past and present, in case there is a future legal dispute or an audit by the Internal Revenue Service.
This is by no means an exhaustive list of the record-keeping requirements that are expected of owner-managers of limited liability companies. The extent of record-keeping that may be required is dependent on the specific operating location of your business. If you are the owner-operator of a Sacramento limited liability company, it would be in your best interest to contact a Sacramento small business lawyer for a full explanation of your business's record-keeping requirements.