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Corporate Clean Up

 
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Corporate Clean Up

Prepared By: Melissa C. Marsh, Los Angeles Business And Corporate Attorney
Written: March 2009
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To maintain a corporation's limited liability shield (so the owners do not become personally liable for the corporation's debts and obligations), a corporation must adhere to corporate formalities. Aside from properly forming the corporation, issuing stock, appointing directors and officers, holding annual meetings of directors and shareholders, and special meetings of the directors when necessary, the corporation should keep an organized and up-to-date corporate record book.

In addition to protecting the limited liability shield in the event the corporation, or its owners, are sued, an up to date corporate minute book can also save you in the event of an IRS audit. Your minutes and resolutions can provide justification for certain corporate deductions and loans. Without proper minutes, the IRS may reclassify some expenses and loans as income. The corporate minute book should also properly document the amounts the corporation intends to pay its officers and directors as compensation (salary, bonuses, reimbursement of business expenses), and its stockholders as dividends. A corporation should also document how much it intends to pay in rent, and should authorize the execution of any real property, or equipment, lease.

Every corporation's record book should contain:

  • The corporationís articles of incorporation, including any amendments;

  • The corporation's bylaws, including any amendments and restatements;

  • The resolution of the incorporator;

  • The board of directors, or sole director's, first organizational director's meeting;

  • The shareholder's resolution to elect S-corporation status, where applicable;

  • Properly completed and up-to-date stock certificates and stock transfer ledger;

  • Copies of the corporation's completed SS-4, completed 25102 notice to the Commissioner of Corporations, annual Information Statement of the Officers and Directors which must be filed with Secretary of State, and where applicable fictitious business name statements, business license, and seller's permit;

  • The annual minutes, or consents, of the board of directors and shareholders; and

  • The special minutes of the board of directors affirming significant corporate acts, such as the execution of a key employment contracts, lease agreements, loans, declaration of a bonus or dividend; etc..

To maintain a corporate book in properly, the corporation is required to prepare corporate minutes, or written consents, documenting the annual meetings of the shareholders and directors, as well as ratifying important transactions entered into by the corporation (special meetings). While it is preferable to prepare these minutes as the events occur, many corporations have failed to do so.

We can help you clean up your corporate minute book, and prepare the necessary minutes or consents to have the corporation's board of directors and shareholders ratify past actions. We cannot however, save or cleanup a corporation that has already received either a notice of a lawsuit, or a notice of a pending IRS Audit. At that point, it is TOO LATE.

If you would like to retain Melissa C. Marsh, a California business attorney with over 20 years experience, to clean up your corporation's record book, to prepare your annual and special minutes of the shareholders and directors, or to just answer your questions regarding the maintenance of your California corporation, please call 818-849-5206 to schedule an appointment, or Send Us An Email.


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© 2009 Melissa C. Marsh. All Rights Reserved.

 
 

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Disclaimer: The information presented on this web site was prepared by Melissa C. Marsh for general informational purposes only and does not constitute legal advice. The information provided in my articles and alerts should not be relied upon, or used as a substitute for professional legal advice from an attorney you retain to advise or represent you. Your use of this Internet site does not create an attorney- client relationship. Transmission of this article is not intended to create, and receipt of it does not constitute, an attorney-client relationship. All uses of the contents of this site, other than personal uses, are prohibited. You may print or email a copy of any information posted on this web site for your own personal, non-commercial, use, but you may not publish any of the articles or posts on this web site without the Express Written Permission of Melissa C. Marsh.


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Located in Los Angeles, California, the Law Office of Melissa C. Marsh handles business law and corporation law matters as a lawyer for clients throughout Los Angeles including Burbank, Sherman Oaks, Studio City, Valley Village, North Hollywood, Woodland Hills, Hollywood, West LA as well as Riverside County, San Fernando, Ventura County, and Santa Clarita. Attorney Melissa C. Marsh has considerable experience handling business matters both nationally and internationally. We routinely assist our clients with incorporation, forming a California corporation, forming a California llc, partnership, annual minutes, shareholder meetings, director meetings, getting a taxpayer ID number (EIN), buying a business, selling a business, commercial lease review, employee disputes, independent contractors, construction, and personal matters such as preparing a will, living trust, power of attorney, health care directive, and more.