LLC Resolution

If you’re a small business owner, you’ll likely be attracted to the idea of an LLC. There are fewer legal requirements to establish an LLC as compared to a corporation. There’s also more flexibility in regard to federal taxes. The owner of an LLC can either be taxed as a sole proprietor or as a partnership. Also, there are more options for how the profits are distributed. In general, an LLC requires less paperwork than corporations.

Also known as the certificate of organization, this is the application sent to a state’s Secretary of State to start an LLC. The document usually contains several official statements pertaining to the organization.

Even though LLC Resolutions are more common with multi-member LLCs, there’s nothing to stop a single-member LLC from using these. A third party may even request to see a resolution.
If you're the sole member of an LLC, it may seem unnecessary but having the proper documentation can be important for any company.

When an LLC has an even number of members, the voting process can be complicated in the event of a management deadlock. If the votes are tied, the management deadlock must be resolved according to the deadlock provisions previously established. Sometimes that means using an external tie-breaker, and other times one member may agree to sell provisions to another. If the members can’t resolve the deadlock, the next step could be arbitration or litigation.

If you're a member, you should have a copy of the LLC’s operating agreement. This is an important document that clearly states the internal rules and regulations governing the company's management. By virtue of the operating agreement, members and managers can minimize disagreements in the LLC.