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Sunday, May 1, 2011

What are Corporate Formalities - Part 2?

My last blog article referenced Corporate Formalities and was good food for thought for many of us "typical business owners". The bottom line for most of us is that we have so many things that need our attention that it is virtually impossible to keep tabs on everything (thus our need for help). I'd like to take a moment to look a little more closely at Corporate Formalities and some specifics:

  • Accounting Practices are a very important aspect. It is paramount that you have separate bank accounts for your business (separate from personal accounts). If you are like many business owners you may own multiple companies. You must have a separate account for each entity and keep separate, and accurate, financial records.

  • Business Expenses need to be tracked and accounted for properly. You should never pay personal expenses out of a business bank account and if you do pay business expenses with personal funds, be sure to record it in the company records or submit an expense report. If you are a multiple business owner, as referenced above, be sure that you are not paying the expenses for one company from a different company's account. This would be considered co-mingling of funds, which is a felony.

  • Corporate Records are different from accounting records. Corporate Records include your Articles of Incorporation, ByLaws, Meeting Minutes, Stock Certificates, Stock Ledgers, etc. It is very imporant that a detailed, organized Corporate Record Book is kept and updated regularly. This means regular reviews and review documentation is crucial and if you have read my blog in the past, you are well aware that I have covered this extensively.

  • Government Filings are another important matter to be aware of. In addition to making sure that tax returns and financial records are addressed, you also need to make sure that your annual filing requirements are made at both the state, and federal, government levels.

There are additional components of Corporate Formalities, perhaps I will cover them next time???

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