We see many business owners that miss this VERY important step. Not because they don't care, but because it isn't an everyday task or it isn't something they know how to do. And that makes sense, most business owners aren't in business to make sure all their paperwork is in order - they are in business to create a great product, provide an amazing service or to create a spectacular experience. It makes sense that the paperwork behind the scenes isn't the first thing most business owners think about.
You are in luck - because it IS something we think about everyday!
What does it mean to maintain your business properly? At minimum you MUST have an annual meeting every year to elect your board of directors and officers. These are meetings of the shareholders and directors. You need to document these meetings and put that documentation in your corporate binder.
Don't know when you are supposed to have your annual meeting? Look at your bylaws. Your bylaws should have a section that designates when your annual meeting of the shareholders will be held. Generally it is held around the same time of year that you incorporated or within a few months of the close of your accounting year. Don't have bylaws? You should! That is a sure way for someone to pierce your corporation veil and argue that you are not operating your business properly. If you don't have them, get them now.
At the shareholder's meeting at minimum you should elect your Board of Directors. Once again, look at your bylaws to ensure that you have the correct number of directors. Some other items you might want to address at your annual Shareholder's meeting:
Any major changes to the business or business structure
Changes to taxation elections
Share transfers
Review of financials
Current share or business valuation (many shareholders agreement state this should be done annually if possible)
Ratification of Director's actions throughout the past year
After the directors are elected make sure you have a Board of Directors meeting. If the directors elected are present, able and willing you can have that meeting RIGHT after your shareholder's meeting. If they aren't able and/or willing you must notice the Board of Directors meeting based on what your bylaws say (see how important that document is?). In your Board of Directors meeting you should review and/or elect your officers. In California you must elect at minimum a President, Treasurer and Secretary. Other important items you may want to address at your annual Board of Directors meeting are:
Powers granted to officers
Banking resolutions (if officers have changed)
Review of financials
Ratification of Director's actions throughout the year
After these meetings are done make sure you document that they happened and the decisions that were made. Then report to the Secretary of State's office who your Directors and Officers are. In California this must be done annually by a specific date (this date is different for every corporation). Check out the Secretary of State's website to ensure that you have been completing this task and when it is due.
These actions are so important to ensure that your business is considered a separate entity and you don't have personal liability for any of the business' liabilities.
Have questions about this important task? We have options for you.
TAKE A CLASS: We are working hard behind the scenes to create an all encompassing course that will help walk you through this important process of corporate maintenance and more (such as trademarking your logo and slogans, writing contracts, privacy policies and terms and conditions for your website etc.). If you are interested in learning more about that course CLICK HERE and we will drop you into our mailing list so you can learn more as we start to launch.
ENROLL IN OUR CORPORATE MAINTENANCE PROGRAM: We can make sure that you are reminded to stay up to date with your required meetings, file with the Secretary of State's office for you, draft your meeting minutes and of course ensure that you are compliant with this task. Our current rate is only $450 per year AND we serve as your agent for service of process for the year. (Last year the Secretary of State's office was fining people $250 a year for missing the step of filing with them annually). This low fee gives you piece of mind and helps you to focus on what you are good at. Want to enroll? Click here, sign up and we will get in touch within one business week about your future corporate maintenance.