By Emilee Gehling and Isabella Erickson
Corporate maintenance refers to tasks that protect your business from dissolution and yourself from personal liability. Corporate maintenance includes filing reports with your state’s Secretary of State, holding meetings of the members or shareholders and directors of your business, and maintaining annual minutes. In addition, keeping your company financial accounts separate from your personal accounts. For instance, it is important not to use company funds for your private use.
All businesses must register with the Secretary of State’s office in every state the business operates in, regardless of which state the business is primarily based. After registering your business, the state requires that you file reports with its Secretary of State to show that your business is still active and ensure that the state has the correct information on file. Reports are due annually or biennially, depending upon your state. For example, South Dakota requires that companies file a report annually, while Iowa only requires them once every two years.
If you do not file reports, your business will become delinquent with the Secretary of State (or corresponding state department). After the grace period, which may be sixty days, the Secretary of State will administratively dissolve your business. This does not mean that you have gone “out of business.” It means that you no longer have the “corporate veil” to protect your personal assets from liability. If your business is sued, for example, and it was administratively dissolved for failure to file reports, then your personal assets, like your home, could be fair game for a judgment.
Corporate maintenance also refers to holding meetings of the members or directors and maintaining annual minutes. Holding meetings shows that your company is separate from yourself. Even if you are the only member of your company, you still want to “hold” meetings and maintain minutes. Annual minutes might seem like a formality if it is just you, but, over time, they create a body of evidence showing that you and your assets are separate from your company. Annual meetings and annual minutes further protect your assets.
Gehling Osborn Law Firm offers corporate maintenance services to its clients, including drafting of annual minutes and registered agent services. As your registered agent, Gehling Osborn Law Firm will ensure that your business remains up to date on Secretary of State filings.