Category Archives: Tips for Your Biz

LLC Veil Pierced Due to Lack of Minutes

Posted on by March 15, 2012

Here is yet another case law study where an LLC owner lost their veil protection because of lack of minutes. We are sad to see these cases and we know that small business owners just need to KNOW that minutes are important and how easy it is to keep up with the required documents!

That’s why we are on a crusade to educate and assist small business owners with company minutes and meetings. Such an easy thing that could save so much money, time, and loss of assets!

Click here to read the law study about the LLC veil being pierced.

Note this is a very “legal” type read by Attorney Richard Keyt (whom we highly recommend), but it is worth it to know the information so the same thing won’t happen to you.

Here’s the direct link: http://www.keytlaw.com/azllclaw/2012/02/colorado-court-pierces-llc-veil/ 

 

Topic: LLC Veil Pierced

Advantages of Linking your Business to your Living Trust

Posted on by October 13, 2011 
3-13-advantages-of-linking-business-to-living-trust
Have you given thought to what would happen to your business if
something happened to you?

Would it continue on, or would it be sold by your heirs?

Linking your business to your Revocable Living Trust will allow
the flexibility of choosing what you want to happen with your
company.

As a business owner, your stock or membership interest is subject
to probate if it is held in your name personally.

The probate process takes anywhere from a required minimum of 4
months up to 2 years. I have even seen probate drawn out to a
lengthy 16 years due to arguments.

Would your business be worth anything after going through that?

If your business is like most, it would be better to sell or
transfer the company immediately so as not to lose clients or
contracts.

It’s easy to accomplish this with a revocable living trust. When
you establish a living trust, set it up to own your business
stock or company membership interest (rather than you owning it
personally).

This is the first step to keeping your business out of the
probate process. Here are the main advantages to linking your
business to your trust:

•	Avoid Probate
•	Avoid arguments (Last Will & Testament contests)
•	Transfer your interest to your heirs quickly
•	Continue with Business as usual or sell business with no probate court intervention

Four Steps to Safeguard Your Business Remember these basic steps
to ensure your business is linked to your trust:

1. Prepare Certificates—Issue your membership interest or stock
in the name of your trust, with you as trustee. For example: The
Celebrity Trust, John Doe, Trustee. Cancel the original
certificates previously owned by you and replace them with the
new certificates.

2. Update Ledgers—For an LLC, the schedule of membership interest
should reflect that your interest is held by you as trustee of
your trust. For a corporation, the corporate stock transfer
ledger would show your shares are held by you as trustee.

3. Update Trust Schedule – List your membership interest or stock
certificate shares on your trust schedule under the headings of
Corporations  or  Limited Liability Companies. If your schedule
doesn’t have one of these subheads, then add it. Place your trust
schedule behind the trust agreement itself.

4. Prepare Company Resolutions – Record your resolution of this
transfer to trust in your company records, with the correct
resolution document and place it in your Minute Book. It is
important to take ALL the appropriate steps to correctly link
your business to your trust, so consult your attorney or minutes
professional about getting it done right.

Need to link your Living Trust with your company? We'll do it for
you. Call us at 480-344-1870. http://www.JustAMinuteLLC.com

Company Minutes: Do LLCs Really Need to File Them?

Posted on by September 7, 2011

Company Minute BookCompany Minutes: Do LLCs Really Need To File Them?
Or Five Reasons to Keep your Company Minutes (for an LLC)

Many LLC owners wonder if they really need to document company minutes. The answer is an unresounding YES. While the company minutes do not need to be filed with any state or federal entity, they should be kept with the Minute Book of the Company. Let me explain a little of what I mean, and why company minutes are crucial to an LLC and the members/managers of an LLC.

With the increase in popularity of LLCs, there has been some confusion as to what paperwork and filings are absolutely required. With a Corporation, the law requires an Annual Meeting of the Stockholders, and an Annual Meeting of the Directors. With an LLC, the law has no such requirements for an Annual Meeting. And many states do not require an Annual Report to be filed. (see the list of requirements by state here)

However, there are several reasons why it is in your best interests to keep up with your Company Minutes and Annual Meetings for your Limited Liability Company.

1) To protect your Limited Liability Status – when you show you are keeping your business a distinct and separate entity from yourself, you maintain that veil of protection. Every business should maintain regular meetings and keep minutes to have a record of their activities. In addition to having your Articles of Organization, you must have your Operating Agreement and 12 other important documents to show you are running your business like a business, and not just an alter ego of yourself.

2) To be prepared in case of an IRS Audit – company minutes give proof of business purpose behind each decision and business purchase, which in turn could save you a lot of headache and cost (small business audits usually produce between $7,000.00 – $14,000.00 for the IRS). It is much easier to have these documents ready, rather than scramble to get them together at the last minute. A highly organized and documented company also prevents a long drawn out audit.

3) To be prepared in case of a lawsuit – the first thing an opposing attorney will ask for during a lawsuit is the company minutes. Of course they want to prove that your LLC is not a real business, therefore opening up the gates to go after your personal assets as well. While company minutes may not prevent a lawsuit against your business, they could prevent a lawsuit against you personally.

4) To be ready to Sell your business – the company minutes will show to your buyer all important and relevant information about the company: such as, any leases that the buyer will be assuming, any employment contracts, or other agreements such as distribution agreements, etc. When you have your minutes in order, your business is in a better position to sell in a more timely fashion.

5) To have solid documentation of business decisions – company minutes allow you to note the reasons behind making critical decisions, which can head off controversy and dissension in your company in the future.

So, keep up your Annual Meetings and document your important business decisions to protect your limited liability status and have solid documentation in the event of a lawsuit or IRS audit. Having your company records will also allow you to be prepared for selling your business if that’s what you decide to do. And, it’s even good reading when you want to review your business actions over the years.

For more information on Company Minutes, visit www.justaminutellc.com