We advise clients on the proper structures every day. Often the best structure these days is an LLC that we may leave as a disregarded entity for tax purposes or elect either S Corp or C Corp tax status.
But no matter what we end up doing with your tax situation or whether your business is an S Corp, C Corp or LLC, there are corporate formalities that need to be followed.
If you don’t follow these corporate formalities, you may:
- Lose your corporate charter,
- Lose personal asset protection,
- Pay thousands of dollars in tax penalities,
- Have your company left in ‘bad standing’,
- Become personally liable for corporation’s activities and debts,
- Allow a creditor, IRS or attorney to seize your personal assets.
One of the most important parts of corporate formalities, and often the most overlooked part is annual minutes. All week I’ve been talking about minutes for one big reason: I keep seeing business owners put off doing their minutes!
Trust me, two years from now you won’t be able to remember everything you did. Take the time this weekend to get your minutes caught up and get yourself back in compliance.