Month 6 – Treating your entity like a real business
Treat your business like a business…
Alright you spent a lot of money on trust and LLCs but you will not get the full benefit if you fall victim to piercing the Veil – the “veil” is an abstract term referring to the invisible wall of protection between you and the corporation. If a plaintiff can pierce this veil then it will likely sway a court decision or increase the settlement amount.
Attorneys will tell you to:
- Do not commingle personal and business funds
- Keep entities records up to date
- Issues Stock
- Have annual meetings and document this – review members/managers, goals, journal, this might even be informal but document it!
- Failure to deal with your corporation at “arm length”
- Document loans and contributions
- Sign on behalf of your entity not for your entity (ie Lane Kawaoka, Manager, FI FOR THE WORTHY LLC)
- DO NOT commit fraud – this goes without saying but this blows up any entity
Meetings specifics to document:
- Type of meeting
- Notice required – see your docs
- Can notice be waived
- Purpose of meeting
- Who Attended
- Where it was held? Virtural?
- Did the company accomplish goals
- What are future goals
- Any resolutions – topics (appointments, removals, mergers, amending articles, asset sales, capital and debt outlook)
My CPA/Attorney has a quick webform for me to enter it in a couple minutes and not get bogged down:
I tend to take the approach of “Business in the front and party in the back“. From a records and documents prospective I look like I have my stuff together. If I ever had to go into court I want “everything in my outlined manila folders” with all these meetings documented.
A little overkill but this is a good example
FAQs
What is the best way to keep day to day decisions in the business?
Keep a journal. And try to document in your monthly/quarterly/annual meeting notes.
What other things should I capture in my monthly meetings?
