Yes- Corporate Resolutions are a necessary part of proper LLC management strategies.
On a regular basis, your small business will make decisions that affect the structure or activities of your business. It is tempting to simply make these decisions through an email or phone call, or for single member LLCs, not even that. However, when you are making these changes, you must follow your corporate formalities in order to receive the liability protection of an LLC.
Corporate formalities are just that- formalities followed by a corporation that undergoes a change of any kind, from acquisitions to hiring to asset sales. What does your operating agreement say about what must happen for you to be able to perform such a change to the business? Can you open a new store location without a formal meeting of the members and managers? Can you hire a new manager without the unanimous consent of the membership? Can you create a subsidiary company for management structure? The steps and requirements for these changes to take place are your corporate formalities that make the business a business and not simply an alter ego of the manager.
Corporate resolutions immortalize the formalities in written form, such that the authorization and authentication of the change are forever official. Drafting a corporate resolution means that you have a written record in your organizations files that shows exactly how you undertook some change to the corporation or made some kind of significant financial decision. In a law suit regarding the LLC, these resolutions are discoverable as part of the regular business records of the LLC—which if they are done properly, should actually be beneficial to those Mangers or Members looking to use the LLC as a liability shield. The absence of the resolutions is the more damning of the two situations!
Draft resolutions are included with every Flat Fee LLC package from Texas Business Attorney Nathaniel Gilbert. It makes more sense to help our clients form their business AND give them the tools to properly manage that business going forward, than to just shove them out the door and hope they know what they’re doing. For more information on LLC Formation and Management with Nate, Click Here. To schedule a free consultation regarding our business law services, Contact Nate directly.