Many of our clients ask whether or not they have to hold an annual meeting if their entity is an LLC. Since it is not required by law in most states, why bother?
The answer goes back to common sense. You must be able to show a court of law that you are running a professional organization, separate and distinct from you, the owner, in order to maintain your liability protection. Why would you give up the opportunity to run – and document – a formal meeting that shows you are acting in a professional manner? More importantly, most operating agreements state that an annual meeting must be held. Failing to abide by the terms of an agreement that, most likely, you signed, can seriously damage your protection.
The key here is not to fuss over the meeting, but to hold it in a manner that is fun. First, choose a restaurant that you particularly enjoy – or perhaps one that you have always wanted to visit, as long as the bill will be reasonable for the level of business your company brought in last year. If you are on vacation, holding your annual meeting while you are away is one way to have the company foot the bill for some of your expenses.
Next, spend a couple of hours preparing. If you have kept your minutes up-to-date during the year, review them to ensure they are complete and note anything that is missing. If your minutes have not been kept up-to-date, make a list of all the decisions made and actions taken by the Managers that need to be approved and ratified. The list does not have to be in the form of a Written Consent: You can create that later.
Create an agenda for your meeting, including items to discuss regarding your plans for the current year. Remember, if you are going to a nice restaurant, this meeting could last an hour and a half to two hours. And prepare a Waiver of Notice of Meeting and sign it.
Bring your agenda and your notes to the restaurant. Hold your meeting in a leisurely fashion. If your spouse or partner is with you but is not part of the company, make sure you note his or her presence as a non-member, and appoint him or her as secretary for the meeting. Make sure he or she takes notes during your discussion to help you write up the resolutions later on. If you are alone, take notes yourself so you can remember what you thought about. Remembering may not be as easy as you think by the time you get to dessert.
Now you may remember from Start Your Expense Tracking that in order to write off a day’s worth of travel expenses you must work a minimum of 4 hours. Two hours of preparation, an hour and a half for the meeting and a half hour writing the Meeting Minutes equals four hours. Now your company can pay for one night of your hotel, car rental, parking, and meals – including the dinner you enjoyed during the meeting. Not bad for a meeting that you may not have wanted to conduct at all.