Did You Know?

Just because you filed for a name of a company and gave your address information to ‘form’ a legal entity through your secretary of state does not mean that you are ‘protected’ as you might intend. Corporate formalities must be observed and that includes proper documentation and following the proper behavior. If your company does not pass the tests when it is challenged then the entity is ‘disregarded’ and you are individually responsible for the obligation or problem at hand.

With a few exceptions for partnerships that are allowed to be created ‘informally’ - every entity (corporation, general partnership, limited partnership, association, limited liability company) must have a governing document. For the corporation it is the By-laws, for a partnership it is the Partnership Agreement and for a limited liability company it is the Operating Agreement.   

In every state except California, Main, Ohio, North Dakota, Idaho, Florida, Michigan, Virginia, Maryland, Delaware, Alabama, Iowa, Nebraska and North Carolina individuals have the ability to ‘form’ an entity online without preparing ‘papers’. There are also an abundance of sites where you can ‘sign up’ to have them form your entity for you. They give you a one size fits all set of documents- usually defaulting to the law of the place of organization. They do not tell you that or provide you with the rules you just ‘adopted’.

It is best to seek counsel before an entity is formed but even if you have gone the ‘solo’ route- a quick check to see what you ‘created’ is usually painless and can provide so much peace.

Call us- we have already created the solutions for you!

 

 

Monitor & Update

The health of a business is not limited to whether its bottom line is black or red. Financial stability and success are good markers for a company but its true health can only be graded on the strength of its foundation. Were the governing documents tossed into the mix as a placeholder for later review and revision? Were the owners involved in their creation? Are the rights and responsibilities among owners clear and established? Are the company’s policies and procedures current or are they stale and outdated? Does your business comply with applicable rules and regulations? In the event of a crisis is there a records policy, a succession plan, a list of passwords? Most businesses experience downtimes either in projects or revenue – either as a function of the nature of the business or as a result of certain times of the year when business slows down. Many businesses are slower during the holiday season – others it is the first quarter or summer when vacations are scheduled. These are perfect times for retooling- revisiting and strengthening your business foundation. We can develop a plan for you to monitor these areas and strengthen weak spots. Let us help with preventative medicine for your business.

4701 College Boulevard, Suite 204, Leawood, KS 66211  |  Voice 913.345.8855  |  Fax 913.345.8352