Your Business Should Hold Annual Meetings and/or Document ...

It?s a good practice for your business to have written documentation of its decisions and provide authority to individuals responsible for carrying out the actions necessary to accomplish those decisions.? Frequently, this documentation can be accomplished by drafting a simple written consent signed by the business?s owners.

1. Legal requirement:? Texas law requires corporations hold annual meetings of the shareholders and directors.? Although Texas law does not require LLC?s hold annual meetings, it is a good practice to hold these meetings for the reasons discussed below.

2. Preserving limited liability:? One of the most important reasons for setting up an LLC or a corporation is to provide business owners, directors and officers with limited liability protection.? Business owners must follow certain formalities to protect their corporations and LLCs, otherwise a court may ?pierce the corporate veil? of the entity and hold the owners personally liable.? An entity must demonstrate that it is acting independently from its owners for the limited liability protection to be upheld.? Even if you are a sole owner, it?s important for you to document your decisions.? Diligently maintaining written minutes reflects the separate existence of the entity.

3. Ratify important decisions:? Business should review and ratify actions taken during the prior year.? Any major decisions that have been entered into during the year should be documented and approved:

• Agreements and contracts
• Loans to or from the business
• Large purchases for property and/or equipment
• Insurance purchases, such as life insurance, disability insurance, medical insurance, liability insurance
• Leases for office space and/or equipment
• Sales of real estate
• Other financial matters such as salaries, bonuses, profit sharing arrangements
• Any unusual events not in the ordinary course of business

Source: http://www.businessbankoftexas.com/your-business-should-hold-annual-meetings-andor-document-important-decisions.htm?utm_source=rss&utm_medium=rss&utm_campaign=your-business-should-hold-annual-meetings-andor-document-important-decisions

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