Learn the basics of LLC record keeping.
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When you create a limited liability company (LLC), keeping careful records becomes part of your daily life. Thankfully, LLC record keeping is generally simpler than it is for a corporation. But that doesn’t diminish its importance.
Every state has slightly different record keeping requirements for limited liability companies, though (and some states don’t even list exact requirements). That can leave you wondering exactly what you’re supposed to do. In this guide, we’ll discuss the basic components that you should keep in your business records, some common questions, and more.
Granted, you can add more records than these if you wish, but these are a good starting point for most LLCs in most states. No matter what, be sure to check your state’s legal requirements.
Keeping careful records of your LLC’s dealings helps maintain your personal liability protections. When you create a limited liability company, you create a separate legal business entity that’s distinct from you as a person. As a result, the LLC has a “corporate veil” that offers limited liability protection to its members; the business owners’ personal assets are usually safe if the business is sued or goes into debt.
However, those protections are only maintained if the LLC is treated as a separate entity. Keeping careful records establishes tangible proof that you’ve treated your LLC as a separate entity. That’s why it’s an essential part of running an LLC.
First, you’ll want to keep all the documents relating to your LLC’s formation. This primarily includes your Articles of Organization (see definition page)— or Certificate of Formation or another title, depending on your state. That said, you should also keep a record of the approval statement you receive from your Secretary of State. If you ever file any amendments to your organizational documents, you should keep records of those, too. Check out amendments definition.
It’s not uncommon for a business to require one or more business licenses or permits. The exact requirements will vary depending on your state’s requirements and your industry, though. If your business does need one, whether that’s a statewide business license or an industry permit, keep a copy of it with your company records. This applies to all federal, state, and occupational licenses.By keeping these with your records, you’ll have your licenses on hand in the event you need to show them to a customer, governing agency, or someone else. If you’re not sure which licenses you need, our business license report can help.
An operating agreement acts a lot like a constitution or handbook for an LLC; it describes and governs how the LLC will operate day to day. (For more information, please see our operating agreement definition page.) Ideally, a good operating agreement describes the members’ ownership percentages and responsibilities, how to add members, how to amend the operating agreement, how the LLC can be closed, how and when future contributions can be made, and more. Basically, it’s a detailed document that keeps the LLC running smoothly.
Since this document is so important, it’s essential to store a copy of your operating agreement — and any amendments to it — with your company records.
If you’re like most people, you probably don’t want to spend a lot of time with anything related to taxes. You especially don’t want to have to dig through a forgotten filing cabinet or a forgotten folder on your computer to find old income tax returns if you get audited. That’s why you should keep a copy of your tax records for a while.The IRS actually offers some guidance about how long you should keep different types of tax records. For many documents, you’ll keep them for three years — the statutory time period the IRS has to conduct an audit. But some documents, such as bad debt deductions, need to be kept as long as seven years. Employment tax returns must be kept for four years.
Members (the people who own an LLC) and managers (the people who run it) are essential to a successful business. Sometimes the same person fills both a member and manager role (member-managed LLCs), and other LLCs have both members and managers (a manager-managed LLC).But no matter whether you pick a member-managed or manager-managed management structure, your LLC should keep records of each member and manager. This includes both past and present members and managers. Be sure to include their names and their current contact information.
Over its lifespan, there’s a good chance your LLC will enter into lots of contracts. Employment contracts, supplier agreements, and nondisclosure agreements are just a few examples. It’s best to keep these contracts on hand — both while they’re ongoing and for a while after they’ve ended.
Keeping these contracts for easy reference helps protect your business and the people you enter into contracts with. If there’s ever a question or conflict regarding one of your agreements, you’ll be able to quickly consult them.
Finances are the lifeblood of any business. And if you’re keeping vigilant books, you’ll probably keep detailed financial records each month: your expenses, member distributions, capital contributions, sales reports, and so on. You’ll also keep your credit card statements, deposit slips, and withdrawal receipts for your business bank account. Our money app can actually help with your day-to-day financials.
You don’t need to keep super-detailed records in your company record book. But you should include a summary financial statement for each year, sort of like an “annual report” statement for your records.
Technically, LLCs aren’t really required to hold annual meetings (unlike corporations, which must have meetings for both their shareholders and their board of directors). But many LLCs choose to have formal meetings of their members, even if only occasionally. If your LLC ever has meetings, you should appoint someone to take minutes.
For example, you should keep records of what was discussed at each meeting, any resolutions that were passed, and so on. This will help you keep track of any important changes in the lifespan of your business.
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Starting and running a compliant LLC can feel like a huge undertaking, but you don’t have to go it alone. Here at ZenBusiness, we can handle the “red tape” side of the business so you can focus on achieving all your business goals. Whether you need help creating your first LLC, a template for your first operating agreement, or worry-free compliance, we have your back.
Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
Written by Team ZenBusiness
ZenBusiness has helped people start, run, and grow over 700,000 dream companies. The editorial team at ZenBusiness has over 20 years of collective small business publishing experience and is composed of business formation experts who are dedicated to empowering and educating entrepreneurs about owning a company.
Ultimately, it depends on what your state requires, as some states require specific records and others don’t. That said, we generally recommend keeping the above records even if your state doesn’t require them. This is especially true for tax records.
Failing to keep these records could make it hard to distinguish your business as a separate legal entity from you personally. That could compromise your limited liability status and put your personal assets at risk.
“Record book” is a blanket term for an LLC’s collection of important business documents and official paperwork, such as federal tax records, formation documents, operating agreements, and more.
They’re a bit different from corporate records. While there is some overlap between record keeping for LLCs and corporations, LLCs generally have less stringent requirements for the type of records they have to keep.
The “best way” to keep your records depends on your personal preferences. Many LLC owners keep a physical binder with printed versions of their documents. But you can, in theory, keep electronic records in a digital folder — ideally backed up and adequately protected — with your records instead. The important thing is that you keep your records.
How long you should keep bank records ultimately depends on a couple of factors. For one, you should consider keeping them for as long as you keep your tax returns for the same year (as additional proof for your returns in case of an audit). But other institutions, like business insurance agencies you make a claim with or even one of your members, might request that you keep your bank records for a set period of time. You’ll have to make a judgment call based on your unique circumstances.
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