When forming or running a Limited Liability Company (LLC), business owners often focus on operations, sales, and compliance. Yet, one of the most critical aspects of corporate governance is often overlooked—the need for formal resolutions to record important decisions.

An LLC Banking Resolution is one of the most common types of corporate resolutions. It is a formal document created by the members or managers of an LLC that authorises specific individuals to open and operate bank accounts on behalf of the business. Beyond banking, resolutions also provide an official record of other significant decisions, such as approving loans, purchasing property, or changing benefit distribution policies.

Although many states do not legally require an LLC to maintain resolutions, these documents play a vital role in transparency, accountability, and organisational order. This article explores the meaning, uses, and importance of LLC Banking Resolutions, along with practical scenarios, benefits, and best practices.

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What is an LLC Banking Resolution?

An LLC Banking Resolution is a written statement that documents decisions made by the members (owners) or managers of an LLC regarding banking and financial activities. It specifies who within the company has the authority to:

Open business bank accounts.
Sign cheques or authorise electronic payments.
Apply for loans or lines of credit.
Manage other financial dealings with banks or financial institutions.

While it primarily focuses on banking, the concept of a resolution extends to other areas of the business. Resolutions confirm that members are informed of, and agree to, the decisions being made.

Why Document Resolutions?

Even when not required by law, documenting major decisions serves several important purposes:

Prevents Misunderstandings
Written resolutions ensure clarity. If memory fades or disputes arise later, the resolution serves as proof of what was decided and who authorised it.
Supports Multi-Member LLCs
In LLCs with two or more members, resolutions provide a shared reference, helping avoid conflicts or accusations of unilateral decision-making.
Provides Legal and Professional Transparency
Resolutions demonstrate accountability to courts, government agencies, auditors, and external advisers such as lawyers or accountants.
Fulfils Record-Keeping Requirements
Some states require resolutions for specific activities, and many banks demand them before opening accounts or approving loans.

Even for single-member LLCs, resolutions can be helpful by showing regulators or banks that the company is run with proper governance.

When is an LLC Banking Resolution Used?

LLC Banking Resolutions are most commonly used for:

Opening or closing bank accounts.
Authorising specific members or managers to handle banking transactions.
Applying for loans or lines of credit.
Approving significant financial commitments.

However, resolutions are not limited to banking. They can also record decisions in other critical areas.

Common Scenarios for Using LLC Resolutions

1. Opening or Managing Bank Accounts

Banks usually require an LLC Banking Resolution to identify which individuals are authorised to act on behalf of the company. This avoids confusion when signing cheques or initiating wire transfers.

2. Approving Loans and Credit

When an LLC applies for financing, lenders often require formal authorisation. A resolution documents the company’s consent, reducing the risk of disputes among members.

3. Buying or Selling Real Estate

For real estate investment LLCs, each property purchase or sale should be supported by a resolution. These documents detail the property location, price, and terms, ensuring all members are informed and in agreement.

4. Signing Contracts

If the LLC engages third-party service providers—such as hiring an appraisal agency or a marketing firm—a resolution can confirm that the decision was authorised. This protects the company from claims of unauthorised agreements.

5. Adjusting Benefit Distribution

Suppose the LLC usually distributes profits equally but, during an economic downturn, decides to retain some earnings for working capital. A resolution allows this temporary change without altering the permanent operating agreement.

6. Adding or Removing Members

When members join or leave the LLC, a resolution documents the change, providing a clear record of ownership and responsibilities.

7. Extraordinary Situations

Resolutions may also address unexpected events, such as capital calls, litigation, or restructuring.

What Should an LLC Banking Resolution Contain?

Although formats vary, a typical banking resolution should include:

Title: Clearly labelled as “LLC Banking Resolution”.
Date: The date of adoption.
LLC Details: Full legal name of the company and state of formation.
Authorisation Clause: Statement granting specific individuals authority to act on the company’s behalf in banking matters.
Scope of Authority: Activities authorised, such as opening accounts, signing cheques, borrowing funds, or closing accounts.
Signatures: Signed by members or managers, depending on the LLC’s management structure.
Certification: Often notarised or certified by the company secretary, if applicable.

Banks may provide their own templates, but preparing an internal resolution ensures consistency across all decisions.

Advantages of LLC Banking Resolutions

1. Clarity and Transparency

Resolutions remove ambiguity by clearly recording what decisions were made and by whom.

2. Legal Protection

In disputes, resolutions provide evidence that decisions were made in good faith and with member consent. Courts often view written resolutions as proof of proper governance.

3. Compliance with Banks and Regulators

Most financial institutions require resolutions before allowing access to company funds. Having these documents ready speeds up the process.

4. Better Internal Governance

Resolutions encourage members to discuss and agree on major actions before execution, promoting collaboration and accountability.

5. Flexibility Without Altering Core Agreements

Resolutions allow temporary or situational changes (e.g., retaining profits in a downturn) without rewriting the LLC’s operating agreement.

Potential Pitfalls of Not Using Resolutions

Failing to use resolutions can create serious problems, such as:

Disputes Among Members: Without a written record, disagreements about past decisions can escalate.
Banking Delays: Banks may refuse to process transactions without proper authorisation.
Legal Vulnerability: Courts may interpret the absence of resolutions as poor governance.
Regulatory Non-Compliance: Some states impose penalties for failing to document key decisions.

Best Practices for LLC Banking Resolutions

Use Resolutions for Major Decisions Only
Avoid unnecessary paperwork by focusing on significant financial or operational matters. Routine tasks usually do not require resolutions.
Keep Resolutions Clear and Concise
Avoid legal jargon. State the decision plainly, with details such as names, dates, and amounts.
Maintain a Resolution Book
Store all resolutions in a central binder or digital file, similar to corporate minute books used by larger companies.
Adopt Resolutions Consistently
Whether for loans, contracts, or membership changes, follow a standard format to maintain professionalism.
Seek Legal Guidance When Needed
For complex financial decisions, consult a lawyer to ensure compliance with state laws and operating agreements.

Example Template of an LLC Banking Resolution

LLC Banking Resolution

Date: [Insert Date]
LLC Name: [Insert Legal Name of LLC]
Resolved That: The following individuals are authorised to open bank accounts, sign cheques, initiate transfers, and borrow funds on behalf of the company:
- [Name, Title]
- [Name, Title]
Scope: Authority includes opening/closing accounts, signing agreements with [Bank Name], and accessing lines of credit.
Certification: This resolution is approved by the members/managers of [LLC Name] as of [Date].

Signatures:
__________________________ (Member/Manager)
__________________________ (Member/Manager)

The Bigger Picture: Resolutions Beyond Banking

While banking resolutions are among the most common, LLCs can use resolutions for a wide range of governance matters, including:

Approving mergers or acquisitions.
Changing the company’s registered office or agent.
Approving litigation or settlement decisions.
Amending company policies or internal procedures.

In this sense, the LLC Banking Resolution is part of a broader culture of documenting decisions, ensuring continuity, and maintaining professionalism.

An LLC Banking Resolution is more than a bureaucratic formality; it is a cornerstone of sound business governance. By clearly documenting who has authority to manage banking affairs, resolutions protect both the LLC and its members from disputes, delays, and legal risks.

Whether your LLC has a single member or multiple members, maintaining well-drafted resolutions demonstrates professionalism, transparency, and compliance. They are invaluable when dealing with banks, regulators, courts, and even potential investors.

In the fast-paced world of business, where memory fades and disputes can arise unexpectedly, resolutions serve as a written safeguard—ensuring that decisions are clear, agreed upon, and properly executed. For any LLC serious about success, adopting the practice of formal resolutions is not just advisable; it is essential.

LLC Banking Resolution: A Complete Guide for Businesses