The Oklahoma Bar Journal September 2023

comply with state and federal regulations, but it’s also critical to a judicial analysis of your gover nance. It may seem antiquated, but it’s still recommended to keep a physical record book as well. Update Operating Agreement If there are any changes to the ownership structure or manage ment of your firm, you need to update your operating agreement accordingly. Your operating agree ment needs to accurately outline the internal management and own ership of the firm to protect the interests of all members. It should also include provisions related to the legal services provided by the professional limited liability com pany, such as provisions related to conflicts of interest, confidentiality and client representation. 4 It is critical that your operating agree ment accurately reflects how your particular firm is currently run. Don’t simply rely on an operating agreement form you found online or copied from another firm back when you were first hanging your shingle. If the terms of your oper ating agreement don’t match how you are actually operating, it could be found to be a sham document and just may be that brick that takes down the wall. Hold Annual Meetings As a professional limited liabil ity company law firm, you need to hold meetings of the members at least annually to discuss and approve the firm’s activities. The requirements for minutes of meetings are more stringent for professional limited liability companies than limited liability companies. You need to maintain detailed minutes of all meetings that include a summary of the

If the terms of your operating agreement don’t match how you are actually operating, it could be found to be a sham document and just may be that brick that takes down the wall.

discussion and any actions taken. Make sure you’ve also followed the notice requirements laid out in your operating agreement prior to holding your meetings. Renew Licenses and Permits If your professional limited liability company requires any licenses or permits to operate, you need to ensure that they are renewed on time. bility company, you are required to file annual state and federal tax returns. You may also need to file quarterly estimated taxes if your firm has significant income. Each member is also required to report their share of the professional limited liability company’s income and losses on their individual tax return. Failure to file taxes can not only result in penalties and interest charges but it is also considered by courts when analyzing your corpo rate governance compliance. File Taxes As a professional limited lia

Register in Every State You Do Business

Even though your firm is head quartered in just one state, you must also register as an out-of state business (a “foreign entity”) in every other state you operate in. If you aren’t registered as a foreign entity in a state you are conduct ing business in, you will not be able to bring suit in that state – obviously, a big risk to avoid. If you were on the fence about whether you should be engaging in illegal, fraudulent or negligent acts, this tidbit may not be the deciding factor for you. But if the threat of jail time and fines wasn’t enough to sway you, it’s also worth noting that committing illegal, fraudulent or negligent acts in and of itself can pierce the veil. Further, a professional limited liability company is an artificial legal entity that can act only through individuals. If a member or manager commits one of these acts on behalf of the firm, they may be personally liable for claims against the firm arising from the act. Make sure to have company Avoid Illegal, Fraudulent or Negligent Acts

Statements or opinions expressed in the Oklahoma Bar Journal are those of the authors and do not necessarily reflect those of the Oklahoma Bar Association, its officers, Board of Governors, Board of Editors or staff.

SEPTEMBER 2023 | 17

THE OKLAHOMA BAR JOURNAL