The Importance of Entity Maintenance
Don’t fall into the trap of thinking that your one-page article of organization or incorporation is all you need. Many cases arise in which the limited liability of LLCs, S corporations and C corporations are being challenged because owners fail to review their entity’s annual maintenance. If your business is structured as an LLC or S corporation, you should do the following annually:
- Have a complete formation package for the company with all of the supporting documents (see below).
- Hold annual meetings with your board of directors or advisors and comprehensively record the meetings’ minutes.
- Renew your entity with the proper secretary of state and pay any annual fees.
- File any necessary state and federal tax filings, including quarterly payroll reports.
Furthermore, have this supporting documentation on file:
- Articles of organization (filed with the state) – LLC
- Articles of incorporation (filed with the state) – corporations
- Operating agreement between the members – LLC
- Shareholders agreement – corporation
- Organizational resolution of the members/shareholders
- Entity minutes book
- Membership/shareholders certificates and seal
- EIN IRS notice/state entity number
- S corporation elections/QSub elections
Having the aforementioned available and organized will be well worth your time should you seek financing or look to sell your company. You should also discuss with your business advisor in order to develop the most efficient and cost-effective processes to reach this goal.