What Your Single Proprietor Corporation Desires to Know and Do

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When you hear about an yearly shareholder meeting, what picture comes to thoughts? A substantial meeting of energy gamers at Amazon, Exxon or Apple? Or Jim, who runs a community landscaping enterprise from his property?

Lots of tiny enterprise owners opt to include (both by forming a C Corporation or S Corporation) to support guard their private assets. In addition, the lowered corporate tax charge can make the C Corporation an eye-catching possibility for enterprises of all sizes. When you kind a C or S corporation, you should adhere to your state’s corporate administrative needs – even if you are just a get together of a single. These needs incorporate holding and documenting board and shareholder meetings.

Single Proprietor Firms

In this post, we’ll response some of the most typical issues relevant to a single proprietor corporation and your corporate administrative requirements…

one. Can I Have a Single Shareholder Corporation?

Yes. All states enable a single shareholder to make and run a corporation. And all states enable it to have just a single director as effectively. So you can be the sole shareholder, director and officer for your firm.

two. What are the Administrative Meeting Prerequisites for a Single Shareholder Corporation?

All companies will need to hold an yearly shareholder meeting and a board of directors meeting. You can have much more if required, but a single per yr is the minimal.

three. What must I Examine in the Yearly Shareholder Meeting?

The primary goal of the yearly shareholder meeting is to elect the corporation’s board of directors for the upcoming yr. With bigger firms, this can be a aggressive and contentious vote. In your situation, you can simply just appoint your self as the director. You will will need to put together meeting minutes that demonstrate you (as the shareholder) elected your self as the sole director of the board.

four. What Ought to I Examine in a Board Meeting?

A company’s board of directors ordinarily can make main economic choices that have an impact on the firm and its shareholders. These choices incorporate: issuing stock, approving loans or acquisitions, appointing officers, setting officers’ salaries, approving raises, and dividend declarations. For single proprietor companies, the most typical matter you will “discuss” and record are important alterations in your compensation and any dividend distributions.

five. How do I Document a Meeting?

You will will need to make meeting minutes for each the board of directors meeting and yearly shareholder meeting. Meeting minutes do not will need to incorporate every single small detail, but do will need to document the critical information and facts and any choices manufactured. Normal meeting minutes incorporate:

  • The date, time and area of the meeting
  • Who attended. Note: for a board of directors meeting exactly where you are the only a single attending, you will will need to document that you hold all 3 officer positions (CEO, CFO/treasurer and secretary) and are in attendance.
  • Agenda goods with a quick description of every item
  • Voting actions – in the situation of a single shareholder corporation and single director, you will just be documenting how you voted
  • Time when the meeting was adjourned

You do not have to make meeting minutes from scratch. You can discover cost-free templates on the internet to serve as a starting up stage. By working with a template, you can fulfill your administrative obligations in no time.

You do not will need to file your minutes with the state or anyplace else. Just maintain them with your other corporate information, this kind of as articles or blog posts of incorporations, bylaws, and resolutions.

six. Do I Actually Require to Bother with This?

When you are a solo shareholder and director, it is pretty uncomplicated to overlook corporate formalities. But skipping these needs could place your liability safety at chance. To preserve your corporation’s standing as a separate legal entity, you should engage in specified corporate formalities (like holding an yearly shareholder meeting or filing your yearly report). If an individual tries to sue you, they could try out to make the situation that the corporation hasn’t met its corporate obligations and is seriously just an extension of you. If they are effective in this argument, they can get a judgment towards your private assets in addition to the company’s sources.

So the moral of the story is you will need to hold an yearly shareholder meeting and an yearly board of directors meeting, no matter how tiny your corporation is. As a single shareholder/proprietor, your meetings and choices will not be challenging. Be absolutely sure to get a handful of minutes to hold your meeting and document it. You will be safeguarding your corporation’s superior standing and your restricted liability standing.

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