Recent Publications By:
BRAD N. SOMMER, ESQ.
Corporate Formality Checklist
Congratulations, you have successfully set up your business entity. Now what’s next? There are a few formalities that must be adhered to in order to provide adequate protection for all of the members including the corporate representatives, officers, and shareholders. The corporation will not be able to maintain its existence and will be subject to liability if these formalities are not followed.
1) Create Corporate Bylaws
A set of bylaws must be formulated and adopted by the corporation. The bylaws are a written statement that should provide the time and place of regularly held meetings and other important internal affairs.
2) Hold Scheduled Meetings
The bylaws should contain a date an annual meeting for the shareholders. Following this meeting, the bylaws should call for an annual meeting for the board of directors. In addition to these annually scheduled meetings, other special meetings should be held to discuss matters of importance. Examples of such situations in which a special meeting should be held are issues such as:
- Entering into any type of significant contractual agreement
- Compensation of officers
- Approval of Mergers
- Filling a vacancy or appointing a new officer
-Designation of banks
3) Keep Detailed Records in Corporate Records Book
The minutes should be taken at each meeting that the corporation holds. While the financial records are especially important to keep, a number of other records must also be accurately filed and maintained. Examples of the types of records that should be accounted for include:
-Advertising and Marketing Records
-Licenses and Permits
4) Develop a Game Plan
Developing a plan of action allows for the maximum efficiency of your corporation. By reviewing operations from the past year and forming long-range planning capacities for the upcoming years, your corporation will be better prepared for proper budgeting and organization.
5) Conduct Business Transactions in the Name of the Corporation
When conducting business matters with third parties, members of the corporation must make it clear that they are acting in the name of the company and not for their own specific individual interests. To achieve this goal, the company letterhead should be on all materials of correspondence and the signature of contracts and other important documents should reflect that the transaction was made under the corporation’s name. For example:
Your Corporation Name, INC.
Your Name, Title in the Corporation
6) Create Separate Bank Accounts
All accounting records concerning the corporation need to be separate from that of the individuals. The books of the corporation must account for all corporate income and assets.
One should seek the guidance of an attorney when setting up the formalities of the corporation to ensure the legality and protection for all members involved in the corporation.