Hello, I'm attorney Elizabeth Potts Weinstein. Today, we’re going to discuss a crucial task for your business: the annual LLC checklist. Limited Liability Companies (LLCs) are generally easier to manage compared to corporations, but there's still essential maintenance to perform. Reviewing key elements annually ensures your LLC remains compliant and effective. Here’s a detailed checklist to guide you through the process.
1. Review LLC Setup and Management
Annual Filings: Every state requires some form of annual filing, such as an annual report or statement of information. This filing confirms details like your business address, registered agent, and the names of LLC members. Failure to file can result in administrative revocation, meaning your LLC could be dissolved.
Operating Agreement: Revisit your operating agreement annually. Ensure it reflects current operations and ownership structures. This agreement is vital, even for single-member LLCs, as it helps demonstrate the legitimacy of your business.
Written Resolutions: Document significant decisions, like taking out a loan or leasing property, through written resolutions. This creates a paper trail and can be crucial for legal and financial purposes.
2. Review Website and Social Media
Privacy Policy: Ensure your website has an up-to-date privacy policy. This policy should accurately describe the data you collect and how you use it.
Terms and Conditions: Update your terms and conditions to reflect current business practices and legal requirements.
Compliance: Check for necessary disclosures, especially if you participate in affiliate marketing. Ensure all disclaimers and disclosures are clearly stated.
3. Risk Management
Insurance: Review your business insurance policies. Ensure you have adequate coverage, including general liability, professional liability, and property insurance. If you have employees, consider additional insurance like workers' compensation.
Behavioral Risk Management: Implement best practices for client interactions, hiring, and contract management to minimize legal risks.
4. Local Requirements
Business Licenses and Permits: Verify that your business holds all necessary local licenses and permits. This may include business licenses, seller’s permits, and home occupation permits, depending on your location.
5. Financial Review
Bookkeeping: Regularly review your bookkeeping processes. Consider hiring a professional if needed.
Tax Planning: Assess your current tax strategy. Determine if your LLC should be taxed as a sole proprietorship or an S-Corp for optimal tax benefits.
Financial Health: Regularly run profit and loss statements and balance sheets. Review your debt-to-savings ratio and ensure you’re setting aside funds for taxes.
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