Record-keeping is never fun.
But once you formed your limited liability company (LLC), the LLC becomes subject to specific requirements of keeping certain records.
For example, your LLC must keep a list of members and their share in profits and losses.
A copy of the articles of organization, plus any amendments, must also be kept by the LLC.
Income tax returns for the six most recent fiscal years must be kept too.
Your LLC must keep a copy of the operating agreement and amendments thereto.
Financial statements of the LLC for the last six fiscal years must also be kept.
And general books and records of the LLC’s internal affairs for the past four years must be maintained.
If any member makes a demand that such records be kept when they are not, the LLC will be subject to a daily penalty of at least $25 per day.
The penalty is payable to the LLC member making the demand for keeping of records.
So if your LLC is a single member LLC, these rules may not seem to have a practical effect because you are the sole party who would demand and benefit from record-keeping.
But if you are a sole member LLC you will still want to keep good records because you may one day bring in another member into the LLC and they may make a demand for these records to be kept.
Of course, if there are multiple members of the LLC anyone of you has the right to demand that the LLC keep these records.
And those members would have the right to the daily penalties for every day the LLC fails to keep the required records.
References: California Corporations Code sections 17701.13 and 17713.07.
This discussion is not legal advice, a solicitation of you as a client, nor the engaging in the practice of law in any jurisdiction.
This discussion is merely for information/education and should not be relied upon for legal advice by anyone because the facts discussed may be different from your own situation. If you need legal advice, consult a qualified attorney.
For more information please visit my website at www.palacioslawoffice.com.