What steps should I take if I am considering buying a business? Be very careful. (a) whenever you buy a business or are considering buying a business, first thing that I ask the people is whether they’ve had any experience in a particular business so that they know what they’re looking for and that every business is unique.
I know particularly the restaurant business or the delicatessen business, the bar business, there’s all sorts of things that unless you’ve been there you don’t have any ideas of what the problems could be as far as a business is concerned and that’s true about any business. So if you don’t have any experience and a going concern be very, very careful.
You need to hopefully work in the business for a period of time so that you can get the expertise and know any problems that are associated with it. So that is huge as far as (a) having the expertise as far as running the business once you purchase it. Also, you need to be sure you review the books and records of the business and do a due diligence as far as that’s concerned.
You need to be very concerned about key employees, making sure that they don’t leave and there goes your book of business as far – whatever business it is and they go out on their own if there are key employees.
So you need to, whenever you locate a business you need to then prepare a contract which will give you the opportunity to exercise due diligence and if you would like to come in and speak to me about what all you need to do to buy business I’ll be happy to discuss it with you and work on preparing the contract but a lot of it has to do with your area of expertise and your ability to know what to look for in any particular business. If you have any questions give me a call at (727) 847-2288.
Why should I file an annual report? Well annual reports are, I believe, due on the first of May and you file those in conjunction with your LLC or your corporation. It’s a revenue generator for the state of Florida, so you must file an annual report and pay the $150.00 fee. If you don’t pay it and you want to keep your corporate existence in effect the reinstatement fee is something like $450.00 or $460.00, so the penalty is rather severe. If you don’t pay the fee, then your corporation or LLC will be administratively dissolved by the Secretary of State.
The other purpose in filing the annual report is it’s a resource that banks or other people use in dealing with an LLC or corporation to see who the resident agent is, see who the officers are or managing members of an LLC. So if you went to open up a bank account well then they would check with the secretary of state to see who the officers are.
So, these are very good reasons why you need to file your annual report every year- because you are going to get dissolved if you don’t and it’s also a resource for people to know who they need to contact in the event that they want to deal with a corporation and verify who the officers of the corporation are, or members of the LLC are. So if you have any questions or need to have your annual report filed give me a call at (727) 847-2288.
What are director’s minutes? Director’s minutes are the minutes of the directors of corporations. The director’s function is to give direction to the management on the corporation (the management being the officers of the corporation). Directors elect who the officers of the corporation are and also make major policy decisions such as opening branch offices and making substantial purchases. If there is a change in the business plan, they adopt that and you incorporate this all into the director’s minutes, as well as election of the officers each year.
Many times the directors, the officers and the shareholders are all the same when you have a small corporation. However, if you want to be treated as a corporation you need to act like a corporation and one of the functions is to have directors minutes as well as shareholder minutes. The directors are elected by the shareholders and we have shareholders minutes. Once the directors are elected, the directors then elect the officers. The shareholders don’t directly elect the officers of the corporation. So you need to have two sets of minutes each year to keep your corporation operating and appearing that it is serving as a corporation. Otherwise, it can be disregarded or unprotected if it is sued, which is the reason why people like to have corporations.
There is protection of their individual asset from those who make a suit to “pierce the corporate veil”. One of the first things they ask for is to look at your corporate record book to see if you do have directors minutes and shareholders minutes and to see if you’ve been conducting business as a corporation (or whether you’ve just been writing checks out to pay your utility bills and treating it as a paper entity.) So if you have any questions about your corporation, directors minutes or shareholders minutes give me a call at (727) 847-2288. Thank you.
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- When I Buy a Business, Am I Buying the Debts?
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- What Do I Need to Do to Start a Business?
- What Steps Should I Take When I Want To Form An LLC?
- What Steps Should I Take If I Want To Buy A Business?
- Why Should I File an Annual Report?
- What are Director’s Minutes?
- Corporate Law Video Index
- What are Corporate Minutes?
- Do I Need to Keep Corporate Minutes?
What are corporate minutes? With corporate minutes, you first have minutes of the shareholder’s meeting. The shareholders should meet once a year, and they need to elect the directors of the corporation. A shareholder who invests money into a corporation controls their investment by electing a director. In addition to the shareholder’s minutes, you should also have director’s minutes. The directors, as their name indicates, give direction to the corporation and they then elect or appoint the officers of the corporation (they’re the ones that elect the officers rather than the shareholders). They should meet annually, approve any major policy decisions and ratify or authorize the president to take various actions. Part of this is that you can have the distinction in that the officers are the management and the directors are the ones that set policy and give direction to the corporation.
Many people who listen to this may be in small businesses and say, “Look, Waller, you don’t understand this. I’m a chief cook and bottle washer. I do everything. I’m the shareholder. I’m the officer, I’m the director and I do everything, so that sounds like a bunch of hooey to me.” Well, it isn’t- if you don’t treat your corporation and have these annual minutes, you’re not going to be afforded the limited liability that you’re probably seeking in doing your business as a corporation. It could be taken that you’re just acting as if it were your business, and therefore not afforded limited liability for the acts of the corporation. So I’d strongly suggest that you have your corporate minutes annually for both the shareholders and directors.
Sometimes folks just get incorporated and they don’t bother to get a corporate book, they don’t bother having corporate minutes, and furthermore, they don’t have any stock issued. They really don’t have much at all and they’re only fooling themselves if they think that they have limited liability under those circumstances. In addition, we have no idea who even owns a corporation if you don’t issue stocks.
So if you’d like for me to write up minutes for your corporation, give me a call at (727) 847-2288.