Disclaimer This article provides general information for educational purposes only. It is not legal advice, does not create an attorney-client relationship, and should not be relied upon as a substitute for consultation with a qualified attorney. Laws vary by state, and individualized guidance is recommended.

Imagine standing at a bank teller’s desk, ready to open a business account for your new Limited Liability Company (LLC). You have your formation documents in hand, but the banker pauses and asks for a resolution.

This happens often because many business owners assume their formation documents are all they need to operate. In reality, while formation documents create the company, an LLC resolution helps prove who has authority to act for it. Think of it as the “bridge of authority,” connecting an internal company decision to the outside parties who need proof that someone can bind the business to a contract, account, loan, lease, or transaction.

What is an LLC Resolution?

An LLC resolution is a formal internal document that records a specific decision made by the members or managers of the company. It creates a written record of the key details behind an important business action, including who approved it, what was approved, and when the approval occurred.

The Hierarchy of Governance

To understand where a resolution fits, it helps to look at the basic hierarchy of LLC documents:

Formation documents establish the company. The Operating Agreement explains how the company is governed. The resolution documents a specific authorization, such as opening a bank account, signing a lease, approving financing, or entering into a major contract.

Legal Status and Requirements

Unlike corporations, LLCs are often subject to fewer formal recordkeeping requirements. However, fewer formalities does not mean no documentation is needed. Even when a resolution is not strictly required by law, it may still be required in practice by banks, lenders, landlords, title companies, investors, or other third parties.
These outside parties want confirmation that the person signing for the LLC has actual authority to do so. A resolution provides that proof in a focused, easy-to-review format.

Why Your Bank May Demand a Banking Resolution

Banks are one of the most common reasons business owners need an LLC resolution. Financial institutions must verify who has authority to manage company funds, open accounts, sign checks, borrow money, and access financial services.
A general Operating Agreement may describe broad management powers, but a banking resolution gives the bank specific authorization language.
A banking resolution may identify:

• Who may open or close accounts
• Who may sign checks
• Who may access online banking
• Who may obtain debit cards
• Who may apply for loans or credit lines
• Whether approval limits or dual signatures are required
  Without this document, the bank may not be able to confirm whether a person is properly authorized to act for the LLC.

Why Single-Member LLCs Should Still Use Resolutions

If you are the only owner of your LLC, preparing a resolution may feel unnecessary. However, it can still be useful because it helps create a formal record showing that the LLC is being treated as a separate business entity.
One of the reasons business owners form LLCs is to create separation between personal and business affairs. Maintaining clear records for major company decisions supports that separation. For example, documenting major purchases, leases, loans, or banking authorizations can help show that the business is operating independently from the owner’s personal affairs.
For a single-member LLC, resolutions can be especially helpful when dealing with:

• Banks
• Lenders
• Landlords
• Business buyers
• Investors
• Tax or accounting professionals
• Licensing agencies

When Do You Need an LLC Resolution?

Not every routine business action requires a resolution. You generally do not need one for ordinary daily tasks, such as buying supplies or paying routine bills. Resolutions are most useful for major or non-routine decisions.

How to Draft a Bank-Ready LLC Resolution

A professional resolution does not need to be overly long, but it should include the information that banks and other third parties expect to see.

Essential Components

1. Heading
   Include the full legal name of the LLC and the date of the action.
2. Background Recitals
   Use “Whereas” statements to explain the reason for the resolution, such as the need to open a business bank account or approve a lease.
3. Approval Language
   Use “Resolved” statements to clearly describe the action being approved and who is authorized to carry it out.
4. Authority Details
   Identify the person or people authorized to sign documents, open accounts, borrow funds, or take other specified actions.
5. Certification
   Include a statement confirming that the resolution was properly approved and remains in effect.
6. Signatures
   Have the appropriate member, manager, or authorized representative sign the document.

Certification of Incumbency

A bank, lender, or title company may also request a certification of incumbency. This is a related document that identifies the current managers, members, officers, or authorized signers of the LLC and may include signature samples.
This can be useful because it allows the company to share only the authority information needed for a specific transaction instead of handing over the full Operating Agreement.

Modern Compliance: Digital Signatures

Business decisions no longer need to be documented in a physical meeting room. Electronic signature platforms are commonly used for internal LLC records, provided the LLC’s governing documents do not prohibit them.
When using digital signatures, keep a secure copy of the signed resolution and make sure the final document is easy to retrieve when a bank, lender, landlord, or other third party requests it.

The Ratification Strategy: How to Fix Past Actions

If a major business action was taken without a formal resolution, the company may be able to approve it afterward through a ratification resolution.
A ratification resolution confirms that the members or managers approve a prior action, even though the formal approval document was prepared later. This can help clean up company records and create a more complete paper trail.
Ratification can be useful for:

• Past contracts
• Prior equipment purchases
• Earlier leases
• Previous bank account openings
• Prior loans or financing actions
• Other significant company decisions

Conclusion

An LLC resolution is more than internal paperwork. It is a practical authority document that helps your business deal with banks, lenders, landlords, investors, and other outside parties. By keeping resolutions for significant decisions, your LLC can maintain clearer records, reduce delays, and show that company actions were properly authorized.

Next Steps for Your LLC

• Review your records for major decisions that should have written approval
• Prepare resolutions for banking, leases, loans, and major contracts
• Keep signed resolutions in a secure digital folder
• Use consistent names and titles across your formation documents, Operating Agreement, and resolutions
• Consider a ratification resolution for important past actions that were not documented

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