It’s wonderful when you can have a successful business with your best friend or family members. However, just because your business is closely tied to your personal relationships does not mean that those businesses are not subject to regulations. All corporations and limited liability companies (LLCs) must comply with all the statutory requirements regarding entity governance.
To fully comply with the applicable statutes for the state where your business is incorporated or organized, you should implement a process to assure that your company maintains required documentation of how the business will be operated and of any major decisions it makes. We recommend:
- Having up-to-date Bylaws or an Operating Agreement;
- Holding annual shareholder or member meetings;
- Holding formal elections of directors at shareholder meetings for corporations;
- Having a valid appointment for the manager of an LLC with a management agreement outlining the manager’s duties;
- Preparing written consents documenting decisions made without a meeting by the directors or members; this is especially important for major actions such as taking loans, mortgages, selling or buyer major assets; and
- Maintaining complete records of the company’s operations and finances.
The first quarter is a good time to update your approach to running your businesses. Please reach out to us if you would like a review of your current recordkeeping or assistance with putting the required compliance processes in place.
Learn more about the firm’s Business & Entrepreneurial Law practice.