It’s the end of the year! I’m busy following up with my clients who have filings that are coming due and trying to make sure that everyone has their Minutes done and their Corporate Records in order. Why? Because if you’re audited or sued, your Minutes Book is the FIRST place an attorney or an auditor is going to look for evidence of non-compliance with the rules.
Here’s a quick 3-step test to see if your Corporate Records are in order.
- Go to your local Secretary of State’s website (if you don’t have it bookmarked, search “Secretary of State corporation”. That should bring up the link to your state’s site. Then, once you get to the website, search your Corporation, LLC or LP’s name. Check the status: are you up to date and in good standing? Or is your entity delinquent for failure to file something? If you’re late with an Annual Report or other kind of report, get it done – fast. Failure to file regular reports can cost you in fees – and possibly even your whole business. States have the ability to dissolve a company when it doesn’t keep its record up to date.
- Check that your Resident Agent is still listed in the Secretary of State’s records. If you’ve forgotten to pay your current agent, they may have resigned. You may or may not get a notice – state rules vary on that. If you find that your agent has resigned, you’ll need to get that sorted out as soon as possible. Again, your company’s existence is on the line here. Failure to have a current resident agent will almost always result in your entity being dissolved.
- Take a look at your corporate Minute Book. When was the last time you held an Annual Meeting and prepared written Minutes? If the answer is “more than one year ago,” get busy and hold a meeting! Preparing Minutes isn’t hard – we cover it in our product, The 60 Minutes Handbook, and give you both an easy-to-follow checklist, to help you get ready plus a Minutes template, to plug in your checklist answers.
The more blanks and missing information there is in your Minute Book, the more likely someone will try to make an alter-ego argument. You don’t want that!! The alter-ego argument says that you aren’t really operating as a business, you’re just hiding behind a shell, and you should be treated as a Sole Proprietorship for liability and tax issues. Plus, a bad Minute book can tell the IRS that you don’t have good records, and they can probably audit you for hundreds or thousands in taxes.