When you file for corporate status, one of the benefits that you can achieve is limited liability. In order to maintain that status, you must make sure that you cooperate with all of the business’s formalities. This will be defined by state law, and most of the time, it is far more than just filing paperwork with the state small business administration. In many states, one of the more common factors is the requirement of formal business meetings. Here are some of the general factors that make a meeting a formal meeting rather than a casual one.
Set Time for the Meeting
Formal meetings must generally be scheduled. Set them up regularly. The frequency should be based on your need as well as the state requirements. In most states, you should plan on having approximately one meeting every quarter at the very least. Make sure that the time is set on the business calendar. If it must be rescheduled, send out an official memo to document the formalization.
Minutes Taken from the Meeting
You need to make sure that minutes are taken during the meeting. These minutes must include the names of the individuals involved in the meeting as well as motions made and decisions reached. Be as precise as you can in what is discussed. Often times, you will have a few pages of minutes. You do not have to record everything verbatim to maintain the status of a limited liability company, but anyone who reads the minutes should be able to have a good understanding of what happened.
These minutes must then be filed in the business records. In some cases, they may even be admitted under the business record exemption if a lawsuit develops. Most states do not require that you submit these each year, but if creditors are trying to claim your business has not followed all the requirements to maintain limited liability, you may have to submit anywhere from a single quarter to a few years worth of minutes.
Focus on Business
Your formal business meetings must focus on the actual business; even though some socialization may take place it should not be the focus. Other business meetings may cover these topics, but your formal one should not. If you are being investigated for failure to follow business formalities, you need to make sure that you can point to instances where you have done nothing but formal business activities. It will also keep your minutes streamlined and present a more professional appearance.
Maintaining your limited liability status as a company is essential if you want to avoid your creditors from reaching your personal assets to satisfy your debts. Each state has general requirements, but in most, you will need to make sure that you have regular formal meetings. These meetings need to have a set time, and minutes should be taken during them. Make sure that these minutes are then filed in the business records so that you can submit them if necessary. Also, make sure that your formal business meetings focus on business rather than socializing.
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