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Holding your Annual Meeting

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.

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Disqualified Managers

For purposes of this restriction, the term “disqualified person” means a person who is —

A – a fiduciary;

B – a person providing services to the plan;

C – an employer any of whose employees are covered by the plan;

D – an employee organization any of whose members are covered by the plan;

E – an owner, direct or indirect, of 50 percent or more of —

  • the combined voting power of all classes of stock entitled to vote or the total value of shares of all classes of stock of a corporation,
  • the capital interest or the profits interest of a partnership, or
  • the beneficial interest of a trust or unincorporated enterprise, which is an employer or an employee organization described in subparagraph (C) or (D);

F – a member of the family (as defined in paragraph (6)) of any individual described in subparagraph (A), (B), (C), or (E);

G – a corporation, partnership, or trust or estate of which (or in which) 50 percent or more of —

  • the combined voting power of all classes of stock entitled to vote or the total value of shares of all classes of stock of such corporation,
  • the capital interest or profits interest of such partnership, or
  • the beneficial interest of such trust or estate,

is owned directly or indirectly, or held by persons described in subparagraph (A), (B), (C), (D), or (E);

H – an officer, director (or an individual having powers or responsibilities similar to those of officers or directors), a 10 percent or more shareholder, or a highly compensated employee (earning 10 percent or more of the yearly wages of an employer) of a person described in subparagraph (C), (D), (E), or (G); or

I – a 10 percent or more (in capital or profits) partner or joint venture with a person described in subparagraph (C), (D), (E), or (G).

These are not all of the restrictions that you should be aware of. Consult with your custodian to understand the rules in order to avoid prohibited transactions with disqualified person(s) that could lead to immediate distribution of the IRA, along with possible taxes and penalties. A prohibited transaction is any improper use of the IRA account by the account owner, beneficiary or any disqualified person (spouse, ancestor, lineal descendant). You should review publication 590 and internal revenue code section 4975 along with consulting with a personal trusted legal adviser before funding any investment within the IRA.

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Dissolving

Can you walk away from your company?

No. Most states have a specific procedure to dissolve or terminate a company. If you do not follow the procedures and do not pay the required fees, you will be personally liable for any penalties and costs that are associated with a delinquent company. Even if you have never started using your company, there may be fees associated with closing it down. If you don’t close it down correctly you will be responsible for any annual state fees associated with having a company. Once you have completed your set-up form and we file the state documents, you have a legal company and you have the responsibility to maintain it correctly until you terminate it.

Please record your decision to cancel your company in a resolution and place it in your minute book.

You should contact an accountant and ask them to prepare the final notice for the IRS.

Examples of some state’s procedures
Note that almost all states require you to provide a state number as well as the company name. This number is found on the state formation documents – “Articles of Organization / Formation / Incorporation / etc.

California LLC
To dissolve your California LLC, you can complete the dissolution form. Use the section 4/8 if you meet the requirements listed.

You will also need to follow the Franchise Tax Board procedures to complete the cancellation.

Delaware Corporation
If you wish to dissolve a corporation, several steps need to be completed in order to Cancel your Corporation with the state of Delaware. If your corporation meets the requirements, please use the Short Form Dissolution. Please complete and send to the address shown on the first page.

Delaware also allows you to pay the annual Franchise tax fee online.

Even though there has been no business activity / stocks issued / profits / etc., the Delaware company should be formally dissolved.

Delaware LLC
If you wish to cancel an LLC, several steps may be required. Please use the Cancellation form. Please complete and send to the address shown on the first page. Pay the annual Franchise tax fee online.

Ohio LLC
Please complete the Ohio form to dissolve your LLC.

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New York State Corporation Forms

There are several documents that you must complete and send in after establishing an S Corporation. This brief video provides an overview of filling in the paperwork.

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Annual Renewal – Nevada

The State of Nevada Secretary of State has a web-based process at https://www.nvsilverflume.gov/home to renew your Annual List and Business License. This recording will give you some pointers on the completion of the forms needed.

Click Here to open a training video that I recorded for you.

Since the company that you had been working with has suddenly vanished along with your money, you will need to provide your own address in place of the previous company’s address.

We will be sending you a form to change the Registered Agent from that prior company to our own Agent services.

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eCommerce Startup

Many people struggle with building a new business. Because there are many unfamiliar concepts we encourage people to start small. For example, when beginning an online business, a good place to start is a free blog. You can start an online Blog by visiting one of several web sites that offer this free service. WordPress.Com and Blogger.com are 2 popular sites that allow you to get started for free. Pick one or both, choose a name and get started now. If you have ever written in a journal or diary regularly you will find it easy to work with a blog.

The idea is to get accustomed to writing about something that interests you every day. The topic could be your family, your hobbies, your concerns. Anything at all. Although what you write is accessible to everyone on the Internet, most of the time your entries will have no other readership than the people you tell about your Blog.

As an example, let’s pretend that you like fishing, and you write about a recent fishing trip. You describe the equipment you used, the places you went to, the weather and the fish that got away. Now, this won’t generate any revenue unless you take the next step.

Adding Google Adsense to your blog.

Google AdSense is a free, simple way for website publishers of all sizes to earn money by displaying targeted Google ads on their websites. AdSense also lets you provide Google search to your site users, while earning money by displaying Google ads on the search results pages.

After Adsense is running, the articles you write about fishing gear will automatically have ads placed beside your words. The ads will probably be for fishing lures, lines, rods and reels. When someone visits your blog (because they searched for something related to fishing), they may click on one of those ads. When they do, you will get paid by Google. Whether someone buys anything from the advertiser or not!

The more you write about something, the more likely it is that your Blog will be visited. The important thing is to keep writing. The more often you write in your blog, the more the search engines will recommend your blog to other people. You don’t have to stick with fishing in your Blog either. You can write about darning your socks, welcoming a service person back from Iraq, the trick you use to save gas, anything at all. Just keep a regular schedule of “posting”. That’s what writing on a blog is called.

Once you start forming a community of regular visitors, they will start commenting on your discussions and that will increase your visibility with Google, Bing, ASK and all the other search engines and that will increase your “traffic” and the likelihood that someone will click on those ads.

The “secret” that few people understand is that all of this is free (except for the cost of your internet access). The Blog is free, the Ads are free and if you write things that are of interest to yourself (and others) then traffic will start to show up and you will be paid!

PLEASE NOTE:
We do not provide education or support for WordPress or Blogger or Adsense. All of the sites have large communities of users who are happy to offer suggestions and advice and fora to participate with when you get stuck…

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Science of Getting Rich

Here’s another tool for your journey to wealth. Do you know the science behind getting rich? Just click here for your own copy of The Science of Getting Rich. Wallace Wattles wrote this book over 100 years ago – and it is still the best book on the subject ever written.

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Banking in USA

Caribbean Banking

Do you live in Puerto Rico or the Virgin Islands? Establishing a company bank account for a “mainland” business has been a challenge. We have been working with First Bank to make it easier. After your Florida LLC is established, contact Hernando Novoa | 305-479-7468 | hernando.novoa@firstbankfl.com

Hernando should arrange to open the account in Florida but have the papers signed at your local branch.

Harris Bank

Please contact Bob TURMELL via email: robert.turmell@bmo.com or telephone: 800-939-7298 x4658. Bob says that he may be able to open an account even if your LLC is not in your home state. There may be a monthly account fee of $8.00 or a minimum daily balance is $1,500.00.

Once you have your physical bank account established, you can start collecting revenue from your web site with PayPal.com

Sign up for PayPal and start accepting credit card payments instantly.

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SOS Updates

NEVADA
(Carson City, NV; March 8, 2012) — Effective immediately, based on approval of Regulation 080-11 by the Legislative Commission’s Subcommittee to Review Regulations, entities such as corporations, LLCs, etc. formed pursuant to Title 7 of the Nevada Revised Statutes are ineligible for the state business license home-based business exemption. This regulation clarifies and reinstates the original home-based business exemption as defined by the Legislature in 2003.

“My office will be enforcing the home-based business exemption in accordance with the original intent of the Legislature, which will level the playing field for the many businesses that have been compliant and paying the appropriate fees,” said Secretary of State Ross Miller.

Title 7 entities claiming a home-based business exemption on their annual list filing after March 8, 2012 will be returned to the customer for correction and to apply for the state business license.

The regulation clarifies that the home-based business exemption applies only to natural persons, i.e. sole proprietors or general partnerships who meet the requirements of the exemption.

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Banking in Canada

Harris Bank

Please contact Harris Bank by telephone: 800-939-7298 x4658. There may be a monthly account fee of $8.00 or a minimum daily balance of $1,500.00.

Once you have your physical bank account established, you can start collecting revenue from your web site with PayPal.com

Sign up for PayPal and start accepting credit card payments instantly.

Accounting

If required by suppliers and drop shippers, the Canadian equivalent of these America licenses would be GST/HST/QST. Please contact Revenue Canada for details.