Section One.
01 Other Limitations on Ownership
Be aware that LLC members may be subject to limitations on the transfer of an interest due to
securities regulations, or limitations set out in the Operating Agreement, buy-sell agreement, or
local law. Ensure that members are in compliance with these possible limitations before
attempting to transfer or sell any an interest of the LLC. Contact your attorney before attempting
a transfer if you are in any way unsure.
Section One.02 Transfer Ledger
After the LLC’s initial meeting, at which an interest in the LLC will be issued to the members,
you must update the LLC’s transfer ledger. Any time an interest in the LLC are transferred, the
transaction must be documented in the LLC’s transfer ledger.
Section One.03 Contributing Real Property to Your LLC
Contributing real estate or contracts to your LLC can be complex. Real estate transferred to your
LLC without a lender’s consent can accelerate mortgage debt. Contributing leases or other contracts
to your LLC can void or change the terms between the parties. Contributing tax-deferred installment
notes can accelerate the recognition of the deferred taxable gain.
If you are considering transferring any real property to your LLC, please contact your attorney for
instructions.
Section One.04 Title to Assets
Generally, the LLC should hold title to assets as follows:
PayrollOne LLC a Utah Limited Liability Company
When transferring title to real estate, different considerations may apply, so always consult your
attorney or a real estate attorney in the state where the real property is located to determine the
preferred method.
Section One.05 How to Transfer Specific Assets
The transferring of assets to an LLC is sometimes called funding. This section covers the funding
or transfer instructions for many types of assets an LLC may own or acquire. Keep in mind that
the value of all assets transferred to your LLC must be determined at the time they are
contributed. Assets that do not have a readily ascertainable value—such as real estate, notes
receivable, business interests in closely held companies or LLCs—may need to be appraised by a
qualified appraiser.
(a) Untitled Tangible Business Property
Untitled tangible property owned by your LLC may include things such as business
equipment, inventory, farm equipment, livestock, and goods on hand. This property is
usually held without any recognized title document. Transferring this property into your LLC
is best accomplished with either a written bill of sale or an assignment. Do not transfer
personal use property such as home furniture, household goods, or other items you
personally use into your LLC.
(b) Titled Tangible Business Property
Titled tangible property includes items like cars, boats and boat trailers, motorcycles, motor
homes, and airplanes. These assets have a certificate of title or other title document showing
who owns the asset.
If you transfer a motor vehicle to your LLC, contact your insurance agent and ask the agent
to ensure that the LLC is shown as the insured on the vehicle insurance policy. Transferring
automobiles to your LLC may cause the insurance rate to change. Therefore, check on this
before transferring automobiles. You may also incur transfer taxes if this is not properly
done. As discussed above, you may consider transferring any potential liability-producing
assets to a separate entity that may be affiliated with or a subsidiary of your LLC.
Section One.06 Federal and State Securities Laws
Your LLC may be subject to federal and state securities laws. You should consult your attorney
and CPA to determine whether they apply. If these laws apply, all sales or offers to sell any LLC
an interest must comply with both federal and state securities laws. Failure to comply can result
in serious consequences.
The legal requirements for disclosing and registering the offering of securities are complex. You
should obtain legal advice from your attorney when developing any financing plan and before
offering to or contracting with any person for the sale of any LLC an interest. If you do not
properly handle matters from the outset, the financing opportunity may be legally barred.
ARTICLE TWO
RECORD KEEPING
State law requires that certain written records be kept and maintained at the principal or
registered office of your LLC. Any member or assignee may make a request for copies of these
LLC records at any reasonable time, and the copies typically must be made available free of
charge.
These LLC records must be in written form or able to be reduced to written form. The required
records generally include the following record types:
Section Two.01 Current List of Members
A current list members that states
(a) the name and current address of each member,
(b) the percentage an interest of the LLC owned by each member, and
(c) the names of the members of each class or group when two or more classes of LLC an
interest are created.
Section Two.02 Copies of Tax Returns
Copies of the LLC’s federal, state, and local tax returns for the most recent six tax years.
Section Two.03 Copies of Specific Documents
Copies of the Operating Agreement, Certificate of Organization, all amendments, restatements,
any powers of attorney, and any documents that create classes or groups of members.
Section Two.04 Other Written Statements
A written statement of
(a) cash contributions and the agreed value of any other property contributed that the
members have agreed to make in the future,
(b) the time when additional contributions are to be made or events that require additional
contributions,
(c) events requiring the LLC to be dissolved and its affairs wound up,
(d) the date each member became a member, and
(e) the books and records of the LLC accounts.
Section Two.05 Maintenance
If the LLC has any members that are entities, their respective books and records should be kept
up to date, and their tax returns and state reports should be properly filed.
