As summer ends, business owners should consider decisions and tasks to complete during the final months of the year. A thorough review of existing corporate documents will address:
- Entity Filings and Reports: Was the business properly formed to operate and the annual state reports filed timely with the Corporations Division of the Department of Licensing and Regulatory Affairs? If prior annual reports or information in the state database need to be addressed, the appropriate filings should be made soon as entities will also have federal filing requirements under the Corporate Transparency Act.
- Authority to do Business in Another State: Is the entity registered in each state where it conducts business? If you are not sure, reach out to us and your tax professional to address this issue.
- Ownership/Equity Issuance and Ledger: Were all shares of stock or membership interests properly granted and issued? Have all equity transfers been correctly documented? Is the stock ledger or membership ledger current, including residential addresses of owners?
- S-Corp Election: If your company is to be taxed as an S-Corporation, was Form 2553 timely filed with the IRS?
- Governance Documents: Does the entity have Bylaws or an Operating Agreement that sufficiently addresses company governance (like voting rights, electing directors or managers, appointing officers, delineating important decisions that may require a supermajority or unanimous vote)?
- Profit Distributions: Do the governing documents address distributions, particularly a minimum amount to cover estimated taxes in situations where the owners are subject to pass-through tax liability?
- Annual Meetings: Have annual meetings been held? If not, have annual consent resolutions been executed?
- Important Decisions: Have important decisions been documented in consent resolutions to show that those decisions were made in accordance with the governing documents?
- Shareholder/Officer Loans: Have all loans to or from the owners or officers been documented with consent resolutions and promissory notes?
- Corporate Transparency Act: For those entities in existence prior to 2024, the Beneficial Ownership Information report must be filed by January 1, 2025. Gathering the necessary information should begin soon, and designating someone within your company to do so will help prioritize this filing obligation.
Let us know if we can help you with these matters and bring your company's documents and filings up to date. Contact us today at 248.477.6300.
