September 15 Tax Time good check-in for Corporate Formalities
Having utilized a 6 month extension in April 2014, many corporate entities will file their 2013 taxes on September 15, 2014. The filing of taxes provides a good opportunity for a corporate formalities check-up as well.
Why? Corporate entities provide asset protection for the shareholders of the company by limiting claims against the business to assets inside the business. In other words, if there is a problem and a business ultimately loses a judgement, the personal assets of the shareholders in the business will be shielded from the claims against the company.
However, to maintain corporate protection a company is required to follow certain formalities. Failure to follow formalities could expose personal assets to the claims of business creditors. So, to protect a business owner’s home from creditors of the business – corporate formalities should be followed.
What? Typically principal shareholders in a corporate entity are required to undertake a number of activities a few of which include:
1) Holding an annual Board of Directors and an annual shareholder meeting;
2) Reviewing and approving the minutes from the previous annual meeting;
3) Reporting and reviewing the operational and financial health of the company;
4) Electing Directors for the coming year;
5) Reviewing any special items or other business items.
Don Sweet, Esq., Head of the Bay Area office of Rodnunsky & Associates is available to help clients engage and satisfy their annual corporate formalities. Don comments that “Not only is it critical to hold an annual meeting to satisfy the formalities of corporate structure, but it is also a great opportunity to step back and spend time working ‘on’ the business as opposed to ‘in’ the business which is what business owners do on a daily basis.”
Don Sweet, Esq. and Rodnunsky & Associates offer business owner clients a Corporate Maintenance Plan to assist in meeting the requirements of state corporation rules.
Don Sweet, Esq., can be reached at 415-746-9542.