Record keeping for LLCs is significantly less demanding than corporations. Nonetheless, certain rules must be followed in order to keep IRS happy and maintain LLC status. While laws will vary from state to state on what documents need to be kept, there are some basics that are universal to all states and represent good practice in general.
LLC Formation Documentation
No matter which state you reside in, you’re going to need to keep a copy of the document you filed with the Secretary of State’s office when you formed your LLC. In most states, this document is simply referred to as the “articles of organization”. This should contain your LLC’s:
- Registered agent
This represents the bare minimum of information these documents should contain. If there are any amendments to that information, that should be kept as well.
Any state documents that you received in response to your petition from the Secretary of State’s office should be kept on hand.
LLC Operating Agreement
The Operating Agreement allows you to formally structure your relationship to the co-owners This includes information regarding percentages of ownership. It also details the responsibilities of each partner. The documents ensure that the courts will respect your status as an LLC.
The Operating Agreement should include:
- Each member’s capital contribution
- Information regarding future contributions
- The right of members to receive distributions
- The rules regarding each member’s voting rights
- The rules regarding member withdrawal and admittance
- The rules regarding events that would cause the LLC’s dissolution
While this information need not be included in the Operating Agreement, it should be kept on-hand with the Operating Agreement.
Membership and Managers
LLCs should keep the names and addresses of current and past members as well as current and past managers on hand.
Taxes and Finances
Income tax returns dating back at least three years should be kept handy. It’s probably best to retain this information indefinitely, but three years is the timeframe in which the IRS can perform an audit.
In addition, records that can prove income and all business expenditures should be kept on hand as well.
The supporting records can include information such as:
- Deposit slips
- Credit card statements
- Paid bills
- Canceled checks
In addition, LLCs are required to pay employment taxes. These records should be kept for a minimum of four years.
They will include:
- The employee’s name, SSN, and dates of employment
- The employee’s check amounts and dates issued
- Time cards or other records of employment
- W-4 Forms and employment tax returns
LLCs should also retain information concerning business contracts and any financial statements they have.
Remember, your business’s status as an LLC may depend on the quality of your company recording keeping. Ensuring you can provide this information on demand is an important part of maintain your LLC status.