Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Feb 8, 2020

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Preserving your LLC status involves detailed record keeping and the careful maintenance of a distinction between yourself and your business. By safeguarding the identity of your business and ensuring your personal liability protection, you will be protecting the status of your LLC as well.

Steps to Preserve Your LLC Status

No matter how small or informal the business, keep your personal funds separate from those of your LLC. Make sure that the LLC has its own bank account in the company name for LLC funds. Never use company funds for personal reasons. If you spend your own money on behalf of the corporation, make sure these transactions are well-documented. This step can provide protection against complaints or litigation that could threaten the company.

Keep up with fees and taxes. Some states levy high initial and annual filing fees to establish an LLC and maintain LLC status. In addition, some states require an LLC to pay franchise taxes in addition to what the LLC members will pay as income tax on their tax returns. A good tax attorney can offer assistance with both personal and business income tax filings.

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Managing Your LLC Status with State or Local Jurisdiction

Maintain current records with the state or states where you do business. Most jurisdictions require a company to pay a registration fee and send in financial statements each year to keep the company in “good standing.” The nature of those requirements can vary from one state to another. The best way to ensure compliance is to contact your state’s Secretary of State to determine the relevant requirements that apply to your LLC. If your LLC falls out of good standing, you run the risk of not being able to obtain financing from banks or, even worse, losing your LLC status.

Getting More Protect for Your  LLC

When you first formed your LLC, you should have written, and had all the members sign, an operating agreement. It outlines the structure, the members and the percentages of ownership. It will also specify if the company is member-controlled (everyone gets a vote) or manager-controlled (one person acts on behalf of the others). This document will be one of the most closely scrutinized in the event of litigation. It will also need to be reviewed and updated by the members when the LLC structure and mission undergo changes.

If your LLC is manager-controlled, the managing member is an agent of the company. He or she must sign all LLC documents as a member or manager of the LLC. These documents will not use personal names. This will ensure consistency among all the filings and public records needed to maintain your LLC status.