When a corporation is created, the owners of the business enjoy many benefits including protection from liability. In some cases, incorporating a business also allows for more favorable tax treatment, depending upon how the business is organized. However, in order to get the benefits that are associated with incorporating, it is important to understand the legal requirements for operating as a C-corporation or as an S-corporation.
The Law Offices of Mike Ross has helped many clients to incorporate their businesses in the San Jose area and to ensure that they follow all requirements for successfully operating as a corporation. One of the issues that you may be concerned with if you have incorporated is how frequently a corporation should hold meetings & update minutes. It is extremely important that you do these things in order to maintain corporate formalities and ensure that the status of your business as a corporation will not be questioned.
Your Business Must Hold Meetings & Update Minutes
You cannot continue to run your business the way that you always have and just incorporate your company for the sole purpose of saving on taxes and protecting yourself from liability. If you incorporate, you actually must follow all rules that apply to all corporations. This means you need to treat the corporation as a separate legal entity with its own finances and its own bank accounts. It also means that you need to comply with all other corporate formalities. You must do these things even if you are the sole owner and even the sole employee of the corporation, or else the status of the business as a corporation could become an issue with the Internal Revenue Service and other regulatory authorities.
Part of maintaining corporate formalities is ensuring that you hold meetings & update minutes. Large corporations have at least one annual meeting where the board of directors is elected. Many large corporations have multiple meetings over the course of an operating year in order to make big decisions like whether executives should be fired or pay should be raised or a company should acquire another enterprise.
When you operate your own business as a corporation, you will need to hold at least one annual meeting and elect corporate officers. Even if you are the only person there and you hold all positions from President or CEO on down to Secretary or Treasurer, you still need to have that annual meeting. When you hold the meeting, minutes should be taken. This means recording the purpose of the meeting and the decisions that were made during its course.
If your business makes major changes or decisions, like acquiring a new piece of equipment, hiring new workers or moving to a new building, it is also a good idea to hold meetings & update minutes, voting on and noting that this new development has occurred.
The Law Offices of Mike Ross can help you to understand all corporate formalities and to comply with all ongoing requirements associated with ownership of a corporation. Call today to speak with a San Jose business law attorney who can guide your business through the process of holding meetings and updating minutes.