Have You Held Your Annual Meeting?

If your business is incorporated, state law probably requires you to hold an annual meeting of the board of directors (even if you—as the sole owner, director, and officer—are the only one attending). Failure to do this could result in the end of corporate status, with liability for legal actions laid at your feet.

If you have a limited liability company or other entity, you may need to hold an annual meeting because of requirements of state law or owner agreements. Follow required rules for holding an annual meeting before the end of the year. Be sure to use the meeting as an opportunity to review financial matters and business plans for the coming year.

Here are some suggestions of what to cover:

  • Setting compensation for yourself and other well-paid employees. If you have not yet authorized year-end bonuses for 2013, now is the time to do it.
  • Adopting employee benefit plans, such as retirement plans, stock option plans, and fringe benefits. Reminder: If you’re adopting a qualified retirement plan for the first time, be sure to sign the paperwork for it with a financial institution (e.g., mutual fund company; brokerage firm) to establish the plan for 2013. You’ll have until the extended due date of your return in most cases to make plan contributions deductible on 2013 returns.
  • Declaring dividends if the corporation has earnings and profits. (Obviously, this isn’t something applicable to unincorporated businesses.)
  • Authorizing borrowing, including factoring of receivables.
  • Discussing plans for the business in the coming year (e.g., buying realty or expensive equipment; launching a new product line).

Details
You don’t necessarily have to hold a physical meeting to comply with legal requirements. Check with an attorney of how to proceed regarding notice for a meeting and other details.

Be sure to record the results of a meeting. This can protect the business from IRS challenges (e.g., whether an accountable plan for reimbursing employee business expenses has been adopted).

An article on annual meetings that you may find helpful can be found here.

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