Fred, an engineer, was a stickler for details. He wanted everything in order with his LLC at all times, no questions asked. He found himself parsing his state’s LLC act for the little details here and there that kept his LLC’s filings and status in perfect order. Just like his professional services, he wanted his business to reflect his fine sense of detail, precision, and order.

Details

State LLC acts can run to dozens of pages of detailed provisions addressing a wide range of potential subjects helpful or necessary to the administration of your LLC. If you have a question having to do with your LLC’s administration, chances are good that your state’s LLC act addresses it directly or indirectly. Read the act online, and retain a skilled attorney to help you interpret and apply the law for your LLC’s benefit. Your state’s LLC act likely includes some or all of the following provisions, or similar provisions. 

Corrections

Your state’s LLC act likely authorizes you to correct inaccurate LLC documents and records filed with your state’s corporations bureau. You or your legal representative may make mistakes in the details of the articles of organization, annual reports, amended articles, and other LLC documents you file with the state. Proofread all documents carefully before submission. If you learn later that you or your legal representative have made a mistake, obtain the state’s form for correcting LLC document errors. You likely won’t be able to change the original document. But filing the error correction form with your state’s corporations bureau may have the same effect. See the example form at the end of this book.

Amendments

You may need or want to amend your LLC’s articles of organization after you have filed your initial articles. Your initial articles may have been entirely correct when you filed them. But circumstances may have changed. Your LLC may have added a purpose that the original articles do not express. Your LLC may need or want a name change. Or your LLC may want to change its duration from a limited period to perpetual or vice versa. Whatever your interest may be in amending your LLC’s articles of organization, your state corporations bureau will likely offer a restated articles of organization form like the form at the end of this book. Complete the form reflecting your amendment, and file the restated articles with your state’s corporations bureau. The amendment will then have taken effect.

Agents

Your LLC may need or want to change its registered agent. Recall from a chapter above that your resident agent accepts service of process, meaning service of a summons and complaint in a lawsuit. Your resident agent should be a reliable person closely connected with your LLC, having an office address for in-person service. Yet the resident agent you originally designated in your LLC’s articles of organization may retire or withdraw, or you may decide that your LLC should have a better or different resident agent. Your state’s LLC act will permit such changes, and your state corporations bureau will likely have a form for changing resident agents like the form at the end of this book. 

Names

Your state’s LLC act likely authorizes LLCs to file a certificate of assumed name, like the certificate at the end of this book. As described in a chapter above, an assumed name, or d/b/a, permits your LLC to legally act under a name other than the name stated in its articles of organization. You don’t have to change your LLC’s name with an amendment to its articles of organization. You may instead assume a second name and use both names interchangeably or each name in a different market. Your state’s LLC act may have detailed provisions regarding how to use an assumed name so as to preserve the LLC’s rights and interest. Don’t overlook the advantages of assumed names. You may be able to improve your LLC’s marketing program, branding, and reach into new markets for new products and services, without having to go through a formal name change.

L3Cs

Your state’s LLC act may authorize a special form of limited liability company known as a low-profit limited liability company or L3C. An L3C is a hybrid of a for-profit and nonprofit corporation. An L3C is not a tax-exempt charitable organization under Internal Revenue Code Section 501(c)(3). Unlike a 501(c)(3) nonprofit organization, an L3C has owners who can make and retain profits out of the L3C’s operations. But like a 501(c)(3), an L3C has a charitable purpose that enables foundations to make program-related investments in the L3C. Consider an L3C if your state’s LLC act recognizes them and you are interested in pursuing a charitable mission but with a reasonable return on your own investment.

Reservation

Your state’s LLC act may permit you to reserve a name for an LLC that you are not yet ready to form but may soon form. Reserving a name for your anticipated LLC can ensure that the name remains available for you, if you need more time to plan your LLC, and are not yet ready to file articles of organization. Your state’s corporations bureau may have a form for name reservation.

Standing

Your state’s LLC act likely has a provision requiring the state’s corporations bureau to issue your LLC a certificate of good standing for your LLC’s use in the course of its business. If your LLC has filed the articles of organization and made the required annual reports to keep your LLC in good standing, the corporations bureau must supply the good-standing certificate at your LLC’s request. You may need a certificate of good standing for your LLC to obtain a loan, gain a contract, or accomplish a similar business interest. Request one from your state’s corporations bureau as needed.

Lawsuits

As indicated in a chapter above, your LLC has standing to bring lawsuits in its name. But if your LLC’s manager refuses to initiate a lawsuit in the LLC’s name, your state’s LLC act may authorize you, as an LLC member, to bring a derivative proceeding, in effect on the LLC’s behalf. Your derivative proceeding may cause or encourage the LLC’s manager to go ahead and have the LLC join the lawsuit. But if not, your derivative lawsuit may gain you the right or interest as a member that you would have preferred that the LLC itself seek and obtain for your benefit. When all else fails, do it yourself.

Oppression

You may have the right under your state’s LLC act to seek civil court relief if your LLC, its manager, or another member engages in willfully unfair and oppressive conduct against your LLC membership rights and interest. Member-oppression lawsuits give members the opportunity to obtain relief from such wrongs as discriminatory distributions, diversion of LLC funds, conversion of LLC assets, and usurping of LLC opportunities. Consult a skilled business attorney about your right to seek civil court relief and to recover from the LLC, its manager, or its other members, through a member-oppression lawsuit.

Key Points

  • Your state’s LLC act will have detailed provisions to aid administration.

  • Your state’s LLC act may permit you to correct errors in LLC filings.

  • Your LLC act will permit you to amend your articles of organization.

  • Your LLC act will permit you to change resident agents.

  • Your LLC act may permit you to reserve LLC names before filing.

  • Your LLC act may permit you to form a low-profit LLC for charity.

  • You may be able to sue on your LLC’s behalf if it won’t do so.

  • You may have rights to prevent LLC manager or member oppression.

20 What Else Useful Is in an LLC Act?