A common and potentially costly mistake made by local business owners is not holding annual meetings. Annual meetings allow organizations to better protect themselves from liability and position themselves strategically among their competitors. Failing to hold annual meetings and following other corporate formalities might result in the loss of corporate/limited liability status, leaving owners and shareholders personally responsible for corporate debts, and potential loss of corporate tax benefits. Here are a few pointers and reminders as you plan this year’s annual meeting.
Your annual meeting agenda should include the following items…
Review past year – Review financial statements, capital acquisitions, education and training, major transactions, and compensation.
Survey coming year – Plan for capital acquisitions, set goals for revenue enhancement, decide on organizational changes, and analyze new fringe benefits.
Tax planning – Plan to achieve a 10 to 15% profit to build equity and consider year-end expenses, year-end bonuses, pension plans, and fringe benefits.
Distributions planning – Plan strategy for incentive compensations, capital retention, S corp dividends, C corp distributions, and loans to shareholders.
Compensation planning – Adopt reasonable compensation and bonus programs.
Legal planning – Establish and implement policies that are designed to avoid liability and protect intellectual property.
And remember, annual meetings should …
– Be held a month prior to or after fiscal year end
– Have an agenda
– Be documentd with minutes
– Be conducted by the president
– Include legal counsel