uit bankruptcy etc.) that your corporation is invalid and all of your corporate liabilities become yours personally even if you didn't personally sign for them. Or that your corporation does not shield your personal assets from your corporate creditors!
These are worst case situations, but they can happen and do! How do you avoid these pitfalls? Take these three simple steps:
1ST STEP - Before you make a major corporate decision (open a new bank account borrow money sell stock purchase equipment or real estate etc.), ask yourself "Am I authorized to make this decision?" Yes, this may seem strange if you are the sole shareholder but necessary. Have you documented this authority? If you have a corporation, you must follow proper company procedures. This includes: issuing notices or waivers of shareholders & organizational meetings; holding shareholders & organizational meetings; adopting bylaws; issuing stock; and documenting every important action). Don't have corporate bylaws? Haven?t done any of this paperwork? They are required! (Note: If you don't have any of these organizational paperwork, order our Corporate Forms on CD
. Forms on CD will help you with all your organizational paperwork as well as other corporate forms. Set up in MS Word, MS Works, and WordPerfect formats).
2ND STEP - Take a few minutes each month to review your corporate paperwork. If you took action without holding a board meeting hold a board meeting after the fact asking the board to accept your decision. Don't forget the Minutes of the meeting (Note: There are several examples of Board and Stockholders Minutes in the Corporate Forms on CD).
3RD STEP - Set up reminders to hold your crucial meetings each year (Annual Stockholders Meeting and Annual Board Meeting)! Be sure to hold them on the dates and times stated in your corporate bylaws. If you don't like the dates and times, be sure to follow the procedures laid out in the bylaws before changing them.