Record-Keeping for LLCs

Adequate and accurate records are important to any entity, including an LLC.  Important records include both public records and private records.

The public records of the LLC include the LLC’s file maintained by the Utah Division of Corporations.  That file contains all documents filed by the LLC with that Division including the LLC’s Articles of Organization (and any amendments), annual reports to the Division, notices of changes in addresses or identity of members, managers, principal office, registered office and registered agent. It is critical that the public file be kept current to show who is authorized to bind the LLC in transactions.

The private records of the LLC include those relating to organization, members, assets, liabilities, transactions, finances and taxes, just to name a few.  If meetings are held, minutes of those meetings should be prepared and filed with the LLC records.  In lieu of meetings, the members could sign a “consent” form to adopt actions for the LLC. Such consent forms should also be kept with the LLC records.

Utah law requires each LLC to keep the following records available for inspection by the LLC members and managers:

  • list of names and addresses of members and managers
  • Articles of Organization for the LLC, with all amendments
  • list of initial members and initial managers (if an “organizer” formed the LLC)
  • income tax returns for the LLC for 3 most recent years
  • financial statements for the LLC for 3 most recent years
  • Operating Agreement for the LLC, with all amendments
  • minutes of all meetings, if any, of the members
  • if provisions covering these subjects are not included in the LLC’s Articles of Organization or Operating Agreement, a written statement showing:
    • the cash or other property to be contributed by the members
    • the times when additional contributions are to be made by the members
    • the right, if any, of a member to receive distributions from the LLC
    • the date or event when a member is entitled to sell his LLC interest back to the LLC
    • the date or event when the LLC is to be dissolved and wound up

Since an LLC is a separate entity, it should have its own Taxpayer Identification Number (TIN) if it has 2 or more members or otherwise needs a TIN for some reason.  That TIN is used on all tax returns for the LLC.

Where an LLC has more than one member, the LLC must file income tax returns if it has any income (or loss) to report.  An LLC’s income tax returns are “information” returns, meaning no tax is submitted with the returns since the LLC members, and not the LLC itself, pay taxes on the LLC’s income.  If the LLC has only 1 member, the LLC files no income tax returns and all taxable income, gains and deductions of the LLC must be reported on the member’s own income tax return.

Also, each LLC must file an annual report with the Utah Division of Corporations.  Failure to file the annual report timely can result in involuntary dissolution of the LLC.

To ensure an LLC’s compliance with the law, advice from a competent lawyer is essential.