{"id":3534,"date":"2019-01-30T12:00:50","date_gmt":"2019-01-30T12:00:50","guid":{"rendered":"http:\/\/www.new.lawofficeresponse.com\/legacylawfirmnew\/?post_type=blog&p=3534"},"modified":"2021-08-17T10:33:08","modified_gmt":"2021-08-17T14:33:08","slug":"stay-in-control-good-llc-governance","status":"publish","type":"post","link":"https:\/\/www.new.lawofficeresponse.com\/legacylawfirmbuild\/stay-in-control-good-llc-governance\/","title":{"rendered":"Stay in Control: Good LLC Governance"},"content":{"rendered":"

\"\"The LLC is a popular way to structure a business because it provides personal liability protection to the members– like a corporation does to its shareholders–but without as many administrative formalities. But if you\u2019re an LLC member, don\u2019t let this lull you into complacency.<\/p>\n

As a business owner, you\u2019re responsible for the proper governance of the LLC.\u00a0 If a conflict arises\u2014either among LLC members or between the LLC and a third party\u2014the governing documents and methods through which the owners govern the LLC may help prevent a conflict from escalating into litigation. Even if a dispute reaches court and you are unable to control the outcome, you can ensure that the LLC presents clear evidence of its intent and purpose by practicing good governance.<\/p>\n

Good LLC governance hinges on four key practices:<\/p>\n

    \n
  1. Practice good recordkeeping.
    \n–<\/strong>Document key business decisions.
    \n-Store records in a secure and fireproof location.
    \n-Provide members with access to records as required by the LLC\u2019s operating agreement.
    \n-Keep the list of members and their ownership interests current.
    \n-Keep the LLC records organized. <\/li>\n
  2. Don\u2019t commingle LLC and member assets.
    \n–<\/strong>Keep all member and LLC assets completely separate. The initial contributions that members make to the LLC and any later contributions made after a capital call should be clearly documented as such.
    \n-Make sure any loans to the LLC\u2014and the repayment terms\u2014are clearly documented.
    \n-All distributions and any advancements to members should be documented as such.
    \n-Members who are also employees of the LLC should receive a paycheck from the LLC payroll account like any other employee would.<\/li>\n
  3. Follow the operating agreement.
    \n–<\/strong>Do what you say you\u2019re going to do. Your LLC should have an operating agreement even if your state\u2019s LLC statutes don\u2019t require one.\u00a0 A well-drafted operating agreement provides a written record of owner expectations in terms of LLC structure and ownership, as well as business, operations.\u00a0 The agreement is an essential tool for keeping the peace among LLC owners and restoring the peace if a disagreement arises.\u00a0 And, if a dispute arises between the LLC and a third party, the operating agreement may become evidence the fact finder considers to resolve the dispute.<\/li>\n<\/ol>\n
      \n
    1. Amend the operating agreement if the LLC is acting inconsistently with it.
      \n<\/strong>-If the LLC ends up in court and the intent of the LLC or its members is at issue, the fact finder will look at three main factors to make a determination: the LLC documents (the articles of formation filed with the state, the buy-sell agreement, if any, and the operating agreement), and the actions of the LLC and its members.\u00a0
      \n–<\/strong>When the actions of the members and of the LLC are in sync with the governing documents, a court is more likely to find an intent that corresponds to the original intent of the members when they formed the LLC.\u00a0 But when the operating agreement says one thing and the LLC or its members behave differently, intent <\/em>is wide open for interpretation.\u00a0 If that happens, a court may place greater weight on the actions of the members or LLC and make findings of fact vastly different from what is found in the LLC documents, resulting in a potentially disastrous outcome.<\/li>\n<\/ol>\n

      \u00a0<\/strong>Practicing good governance of the LLC helps make the intent and purpose of the LLC clear to its members and to outside parties.\u00a0 And, if a conflict goes to court, good governance provides the judge or jury with a clear picture of what the members intended for the LLC.<\/p>\n

      We work closely with business owners to create and implement forward-thinking business-planning strategies.\u00a0 We anticipate what can go wrong and counsel our clients on how to best maintain their businesses so that they are well prepared to weather any storm.<\/p>\n

      If you are interested in learning how we can assist you and your family with business planning, please contact Legacy Law Firm, P.C. at (605) 275-5665 to schedule a free consultation today!<\/p>\n

       <\/p>\n

       <\/p>\n","protected":false},"excerpt":{"rendered":"

      The LLC is a popular way to structure a business because it provides personal liability protection to the members– like a corporation does to its shareholders–but without as many administrative formalities. But if you\u2019re an LLC member, don\u2019t let this lull you into complacency. As a business owner, you\u2019re responsible for the proper governance of […]<\/p>\n","protected":false},"author":9,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1156],"tags":[],"_links":{"self":[{"href":"https:\/\/www.new.lawofficeresponse.com\/legacylawfirmbuild\/wp-json\/wp\/v2\/posts\/3534"}],"collection":[{"href":"https:\/\/www.new.lawofficeresponse.com\/legacylawfirmbuild\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.new.lawofficeresponse.com\/legacylawfirmbuild\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.new.lawofficeresponse.com\/legacylawfirmbuild\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/www.new.lawofficeresponse.com\/legacylawfirmbuild\/wp-json\/wp\/v2\/comments?post=3534"}],"version-history":[{"count":1,"href":"https:\/\/www.new.lawofficeresponse.com\/legacylawfirmbuild\/wp-json\/wp\/v2\/posts\/3534\/revisions"}],"predecessor-version":[{"id":10231,"href":"https:\/\/www.new.lawofficeresponse.com\/legacylawfirmbuild\/wp-json\/wp\/v2\/posts\/3534\/revisions\/10231"}],"wp:attachment":[{"href":"https:\/\/www.new.lawofficeresponse.com\/legacylawfirmbuild\/wp-json\/wp\/v2\/media?parent=3534"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.new.lawofficeresponse.com\/legacylawfirmbuild\/wp-json\/wp\/v2\/categories?post=3534"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.new.lawofficeresponse.com\/legacylawfirmbuild\/wp-json\/wp\/v2\/tags?post=3534"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}