DIY LLC Health Audit — 20-Point Checklist

Twenty checks that reveal whether your DIY LLC is actually protecting you — or whether you've quietly voided your liability shield without knowing. Run this once per year, or after any major business change.

Why this audit matters

The most common veil-piercing trigger in U.S. business case law is commingling personal and business funds. Founders rarely realize they've done it until a creditor or plaintiff exposes the lapse — by which point, the LLC's protection is already gone. This audit surfaces the lapses while they're still fixable.

Section 1: Formation Integrity (4 checks)

1. You filed Articles of Organization with the state and have a stamped/approved copy on file.
2. You have a current operating agreement, even if you're a single-member LLC.
3. Your registered agent is current and reachable at the address on file with the state.
4. You're in good standing — not administratively dissolved — and your most recent annual report has been filed.

Section 2: Financial Separation (5 checks)

5. You have a dedicated business checking account in the LLC's name.
6. Every business expense is paid from the business account, never from a personal account.
7. Owner draws are documented as transfers between accounts — not as personal expenses paid from the business account.
8. You have a business credit card or debit card in the LLC's name (not your personal card).
9. You can produce a clean ledger of business income and expenses on demand, separate from your personal finances.

Section 3: Compliance Hygiene (4 checks)

10. You have an EIN from the IRS (free at irs.gov) and use it on all business tax filings.
11. You've filed federal and state taxes for every year since formation.
12. You have a calendar reminder for your state's annual or biennial report deadline.
13. If you're a multi-member LLC or have elected S-Corp status, you're filing the correct forms (1065 partnership return or 1120-S).

Section 4: Contracts & Operations (4 checks)

14. You sign every business contract as "[Your Name], Member, [LLC Name], LLC" — never just your name.
15. You have written agreements with key vendors, contractors, and clients (not just verbal handshakes).
16. Your business email, business cards, website, and invoices all use the LLC's legal name (or a properly registered DBA).
17. If you've changed your business address, you've updated it with the state, IRS, and bank.

Section 5: Insurance & Risk (3 checks)

18. You carry general liability insurance ($300–$600/yr for most small businesses).
19. If you have employees, you carry workers' compensation insurance (state-required in most states).
20. If you handle client data or money, you carry professional liability (E&O) insurance.

Score yourself

• 18–20 checks complete: Your LLC is well-protected. Run this audit annually.
• 14–17 checks complete: Functional but vulnerable. Fix the gaps within 30 days.
• 10–13 checks complete: Your liability shield is at risk. Schedule a comprehensive review.
• Under 10 checks complete: You may be effectively operating as a sole proprietor with extra paperwork. Get expert help immediately.

The four most-common gaps

1. No operating agreement — even for single-member LLCs, this is the #1 missing document.
2. Mixed accounts — "I just used my personal card for the office supplies" is exactly how veil-piercing starts.
3. Annual report lapse — administrative dissolution happens quietly; many founders only find out when a lawsuit shows up.
4. Signing contracts personally — if your signature doesn't say "Member, [LLC Name], LLC", that contract may be a personal obligation.

Next step

If you scored under 17, get the LLC Formation Kit ($27) — includes operating agreement templates, contract signature blocks, an annual report tracking sheet, and a compliance calendar.

Or start The Everyday Owner's Blueprint → for ongoing compliance monitoring and 24/7 advisor access.