Thursday, August 04, 2011 Do I Really Need to Do My Corporate Minutes?
I often see business clients to assist them with important business decisions, draft a contract, or talk about succession planning and when I ask what seems to be an innocent question of whether they are current with their corporate minutes, I receive an embarrassed "no." Some people might have forgotten this year, some may not have ever known this was needed, and other may have been meaning to get around to them since 1989.
As you are probably aware there are many advantages to incorporating your business. Corporation owners enjoy the benefit of limited liability protection and generally are not responsible for the debts of the business. In short, creditors are not able to come after personal property such as your home or family car to satisfy business debts. Additionally, corporations may gain tax advantages that are not available to other business entities. These advantages can include write offs of health insurance premiums and savings on self-employment taxes. Incorporating bolsters the credibility of any business increasing investment and loan opportunities for the business. Retirement funds and qualified plans, such as 401(k)’s, can be more readily established through corporations than through other business entities.
All of these benefits do not come without performing the proper formalities of running a business in order to maintain corporate status. One important formality involves keeping a record of all corporate actions - the often forgotten corporate minutes. California Corporations Code Section 600 requires that at least an annual Board of Directors Meeting and Shareholders Meeting is held and minutes are recorded and signed. While complying with these formalities may be require some extra time and expense, it is required in order to enjoy the benefits awarded.
Failure to comply with corporate formalities, such as neglecting annual meetings, can result in the loss of your personal liability protection rendering you personally liable for your corporation’s bills and debts. Observing corporate formalities continues to protect the investment you have made in your business. Feel free to contact me if you have questions or need help getting caught up with your documentation.
Tuesday, May 18, 2010 What Business Owners Need to Know about Unemployment Benefits
Many of my business clients ask me questions about how unemployment benefits work; so I thought I would give an overview.
Unemployment benefits provide payments for workers who have lost their job through no fault of their own. The unemployment program is funded by employers who pay taxes on wages paid to employees. The tax works like any other insurance premium. It is determined in part by amounts of unemployment insurance benefits paid to former employees of the taxpaying employer. Therefore, employers have an incentive to block former employees from making successful unemployment insurance claims.
California sets eligibility requirements that limits who is able to collect unemployment. In order to be eligible a worker:
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Must be completely unemployed or working less than full time
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Must be physically able to work, looking for work, and willing to accept a suitable job
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Must have worked in last 18 months and
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Must have lost employment through no fault of their own.
The last factor is of particular importance to employers seeking to contest a claim by a former employee. The reason an employee is out of work affects the individual’s eligibility for benefits. For instance, a worker that is laid off due to lack of work or a reduction in hours will generally not be found to be at fault. When deciding if a former employee is at fault it is presumed that an individual has been discharged for reasons other than misconduct in connection with work performance and not to have voluntarily quit without good cause unless the employer has given written notice to the contrary. This presumption can be overcome by a showing of misconduct connected with work performance. Under these circumstances benefits are determined on a case by case basis. Misconduct includes, among other things, destroying or stealing company property, neglecting work duties due to intoxication, and physically assaulting a co-worker.
On the flip side, if an employee quits or resigns they are not likely eligible for unemployment benefits. If an employee can show they quit for a good cause such as intolerable or unsafe working conditions they might be able to prevail. Additionally, workers who quit for valid medical reasons or to relocate with their spouses might be considered to have quit for good cause. |