Consequences of missing the meeting
If you are the only owner or work with family and friends, you may think that it’s no big deal to skip the formalities. After all, you may be talking only to yourself. However, missing the meeting is a big deal; it can cause problems:
Loss of personal liability protection. If you don’t respect the corporate entity, creditors may be able to get at your personal assets by “piercing the corporate veil.” Even if you don’t have creditors breathing over your shoulder now, you could face problems in the future, and your prior activity (i.e., not holding annual meetings) may come to light and hurt you then.
Missed tax opportunities. There are various tax strategies that require the corporation to formally adopt. Here are some of them:
- Accountable plans for employee expenses and reimbursements for officer’s expenses
- Accounting procedure to ensure consistency needed to use the de minimis safe harbor for tangible personal property
- Employee benefit plans (adoption assistance, dependent care assistance, education assistance)
Missed financial opportunities. Like missed tax opportunities, there are certain actions by the corporation that require formal approval. Again, here is only a partial list of actions to consider in an annual meeting:
- Dividends to shareholders
- Purchasing the assets of another company
- Sale-leaseback arrangements
- Selling corporate assets or shares
Mechanics of the meeting
Check your state law requirements about notice to shareholders and the information to include in the minutes of the meeting. You can find templates for these actions online, although you may have to pay for them.
There’s a free template from Northwest Registered Agent LLC. There may be blank forms in your corporate book if you obtained one when you incorporated. If you don’t know what to do, contact an attorney.