The Resolution Every LLC Should Use

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1. Feature: Template Tuesday: The Resolution Every LLC Should Use (4 min)

2. From the Archive:

   • AI can’t find your business. That’s a problem.

   • Don’t Call Them a Co-Founder Just Yet

Please note there will be no article on Thursday, November 27. Regular publishing resumes with Sunday’s edition.

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Missed our last feature article? LLC Ownership Rules Every Founder Should Know

Owning an LLC brings a responsibility that every business owner eventually recognizes. You must run the company with care. You must keep decisions organized and documented. You do not need polished corporate formalities or a stack of paperwork. You do need a simple, reliable way to show what the company approved and who had the authority to act. That is the job of a resolution.

A resolution is the written record of an internal decision. It shows that the people with authority made a choice and agreed on it. Banks rely on them. Title companies insist on them. Buyers and investors examine them when valuing your business. When your resolutions are clear and complete, your business looks disciplined and well run.

Most small business owners never use resolutions. They approve decisions in conversation or by text message. Those choices work in the moment, but they do not create a record that protects the company. The trouble shows up later. A lender asks who approved a loan. A buyer asks whether a membership transfer was formally authorized. A title company asks who had signing authority for a real estate closing. You may know what happened, but your company records simply don’t reflect the decision.

A resolution closes that gap. It creates a defensible record of what the company did, how it did it, and who had authority to carry it out.

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What Makes a Resolution Defensible

Every strong resolution includes the same essential elements. It states the action being approved. It grants authority to the person who will carry it out. It confirms that the decision follows the company’s rules. And it ends with the required signatures.

Premium subscribers will see these principles reflected in the template, but the lessons stand on their own. Every SMB owner should understand these building blocks, no matter what tool they use to document decisions.

1. A Clear Description of the Action

A resolution works because it removes ambiguity. It begins with a simple statement: “Resolved, that the Members hereby approve the following action.” The owner then inserts a plain description of what the company has decided to do. The description might read “The Company shall open a business checking account at [Bank Name].” It might say “The Company approves the transfer of [Member Name]’s membership interest to the [Trust Name] Trust.” The tone is direct and neutral. The purpose is clarity.

This is the heart of the resolution. Five years from now, someone reviewing the records should be able to understand exactly what the company approved.

2. Proper Authority to Carry Out the Decision

Every company decision requires someone to act. Someone must sign agreements. Someone must complete filings. A defensible resolution makes this clear. It states that the members “authorize [Name, Title] to execute any agreements, certificates, filings, or documents necessary to carry out this action.”

This single sentence provides assurance to banks, title companies, lenders, auditors, buyers, and vendors. It tells them that the signer had proper authority. It also protects the person signing by giving them clear permission. Many ownership disputes trace back to unclear authority. This language prevents that problem.

3. Confirmation That the Decision Follows the Company’s Rules

A resolution should confirm that the company followed its own governance requirements. The template does this by stating that the decision “complies with the Company’s Operating Agreement and formative documents” and that it represents “unanimous written consent” whenever written consent is used.

This confirmation protects the record. It signals that the company did not violate its internal rules. If you have an Operating Agreement, it tells readers that the action does not contradict it. If you do not have one, it tells readers that the company made its decision in line with state law.

Owners sometimes worry that their Operating Agreement is outdated or incomplete. This confirmation clause helps stabilize those concerns. It shows that the company considered the right factors when approving the action.

4. Complete and Correct Signatures

A resolution is not complete until it is signed. The template emphasizes this with a clear instruction that “Every Member must sign” for member-managed LLCs, and similarly that “Every Manager must sign” for manager-managed LLCs. This ensures that every person with voting power agreed to the decision.

There is also a separate signature line for the LLC entity itself. It is optional. It should be used only when a bank, title company, lender, or counterparty asks the LLC to sign as an entity. This distinction matters. Owners often sign in multiple capacities without understanding why. A clear structure prevents confusion and creates a clean record for anyone reviewing the documents later.

A defensible resolution has the right signatures in the right places. That alone sets your company apart from many small businesses.

5. Practical Flexibility in How the Resolution Is Executed

A good resolution should not slow the business down. It should make action easier. That is why the template includes language stating that “This Resolution may be executed in counterparts, including electronic signatures.” This allows each signer to execute the resolution separately, even on different days, and do so electronically.

This is more than a convenience. It is standard practice in modern business, and most institutions expect it. It lets you document decisions promptly and efficiently.

Why Written Resolutions Require Unanimity

A written resolution is valid only when every voting member agrees. When a decision is unanimous, a written resolution is the fastest and cleanest method. When a decision is not unanimous, the action should be documented as meeting minutes instead. The template explains this plainly without relying on cross-references. It notes that written resolutions apply to unanimous decisions, and that minutes are used when the company votes or when its governing documents require a meeting.

This distinction matters. Unanimous written consent gives the company a clear and direct record. Meeting minutes show how the decision was debated, who attended, and how votes were cast. Both methods are valid. Each has its proper use.

Why Resolutions Build Long-Term Value

Resolutions shape the way others view your business. They help you borrow, open accounts, make structural changes, and defend past decisions. They also help you sell the company. Buyers study resolutions because they reveal how a company has been run. They show discipline. They show clarity. They show that the company treated its decisions with respect.

Clean resolutions reduce friction with banks and vendors. They clarify authority for employees and partners. Most importantly, they form a record that protects you when memories fade or personnel change.

The Value of Doing This the Right Way Every Time

A resolution does not need to be complicated. It needs to be clear and correct. It needs to tell the story of a decision in simple language. It needs to state what the company approved, who can carry it out, and how the company followed its rules. It needs signatures.

If you build the habit of documenting important decisions with resolutions, your company becomes easier to run and easier to trust. You reduce disputes before they happen. You protect yourself from misunderstandings. You also give your future self a record you can rely on.

Good resolutions will not make your company perfect. They will make it stronger. They will make it more credible. They will make it easier to operate. And over time, they will become proof that you handled the important decisions the right way, every time.

Need our latest resolution template for your business? Simply click Premium and upgrade your free subscription. For $85.95 yr. or $7.95 mo. you will receive the resolution template and over 20 other professionally-prepared business templates from our ever-expanding template library!

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