Business Books And Record-keeping

Keeping extensive LLC records is not a formal necessity, as it is for corporations, which is one of the reasons why LLCs are so appealing to starting enterprises. However, some documents must be kept in order to preserve limited liability status. Furthermore, LLCs should maintain track of their records in order to avoid litigation and other obligations.

Organizational and operational documents for the LLC

The major organisational papers that an LLC should have on file are its formation paperwork and operating agreement. These papers are normally necessary in every state and serve as the foundation for the formation of your LLC.

Other papers, such as those that explain corporate choices, are sometimes optional, but should be included in your LLC books so that you can keep track of your firm’s finances and general decision-making.

Articles of Incorporation

Every state requires the Articles of Organization (also known as a Certificate of Formation or Certificate of Organization in certain jurisdictions). This document serves as documentation that the LLC was founded lawfully in that state, and it describes some of the LLC’s essential structural aspects, which may include:

Whether the LLC will be run by members or by management
Whether the LLC is a series LLC, a PLLC, or something else.
The duration of the LLC (if not perpetual)
The legal purpose of the LLC
While you may submit the Articles of Organization on your own, it is best to get the assistance of an attorney or an LLC formation service to prevent filing errors.

Operating Contracts

An operational agreement is a crucial contract that describes how the company will operate. It specifies who owns the LLC, what proportion of the firm each member owns, when payments are due, and how much money each member receives.

The majority of states do not need an LLC to keep an operating agreement, but several do, including California, Nebraska, New York, Maine, Delaware, and Missouri. Regardless, creating and maintaining one is important practise.

Contributions in Kind

Capital accounts are the financial investments made by each LLC member in the firm. Following the first investments (which are normally defined in an LLC’s operating agreement), more contributions might be made in the future. Because capital contributions might have an impact on ownership percentages, the organisation should maintain precise records whenever they occur.

Keeping track of capital contributions in your LLC’s records allows you to see how much money is invested in the business (and by whom).

Resolutions and Minutes

If your LLC chooses to have formal meetings, maintain meeting minutes as well as any decisions that come from these sessions in your LLC records.

Meeting minutes should include who was present, what agenda items were addressed, and the outcomes of any votes, but the details can vary. Resolutions should contain a clear statement of the resolution, the date it takes effect, and the signatures of all determining members.

Financial Statements

Financial records include things like company bank account statements, cash flow estimates, sales reports, tax returns, and profit and loss statements. These limited liability corporation records can assist you in understanding where your money is going and how well your firm is performing.

Tax Returns

Another area where limited liability firms vary from corporations is in taxation. LLC shareholders pay personal income tax on their portion of earnings rather than corporate income tax.

Federal and state income taxes, as well as payroll taxes, will be included in your tax records. The following are some frequent IRS tax filings for LLCs:

Form 1065: Partnership Income Return
Form 1099: Miscellaneous Income Schedule K-1 (Form 1065/Form 1120-S): Partner’s/Share Shareholder’s of Income Schedule C (Form 1040): Profit or Loss From Business Schedule SE: (Form 1040): Self-Employment Tax Schedule SE: (Form 1040): Self-Employment Tax Schedule SE: (Form 1040): Self-Employment Tax Schedule SE: (For
These forms are available for download from the IRS website as well as the website of your state’s relevant agency (e.g., Department of Revenue, etc.). Accounting software, such as FreshBooks, often allows you to import these forms straight into the platform.

You must also maintain track of your company costs so that you may record them on your personal tax return.

The IRS advises that companies maintain their federal tax records for at least three years, however this may vary based on the filing practises of your LLC.

Should I Maintain Books for My LLC?

Maintaining strong record-keeping practises for your LLC books might assist your business avoid financial or liability concerns in the future. Keep in mind that each state has different standards for retaining papers and operating agreements (even if you don’t have to file them), so check with your state’s business services division.