Posted by: Robin Gronsky | March 27, 2013

Spring Cleaning for Your Business (Part I)

It’s spring and lots of us are scrubbing our houses and cleaning out our garages from top to bottom in that annual ritual known as spring cleaning.  Start a new habit with your paperwork and do an annual spring cleaning for your business.

First step is to take care of your legal requirements.  Are you a corporation or a limited liability company (LLC) in New Jersey?  If so, you need to file an annual report and pay franchise taxes.  Does your county have any annual filings or are you due for a renewal of your Assumed Business Name filing (also known as a DBA filing)?

Second step, were your corporate stock certificates properly issued?  Are there any changes that need to be recorded in your stock ledger?  If you are an LLC, your operating agreement (you do have one, don’t you?) should have an Exhibit to the agreement which lists who is a member and the percentage ownership each member has.  Is your Exhibit up-to-date?

OK, the third step for corporations is checking whether you held your annual meetings in the past 12 months.  You should have written minutes of the annual shareholders’ meeting, even if it was you sitting in a park with a cup of coffee, mentally voting on you as the sole director.  Immediately after your annual shareholders’ meeting you should have held your annual directors’ meeting to elect officers.  You should have written minutes of that meeting, as well.

If you have more than one owner in your business, you should have a buy-sell agreement.  This type of agreement describes what will happen if one of the owners wants to leave voluntarily, if the other owners want to kick another owner out, if one member becomes disabled or dies.  If you have a buy-sell agreement, does the business have enough money and life insurance to buy out an owner?  If your buy-sell agreement is more than 1 year old, is the way you value the business (if you need to buy out one owner) still a valid method?

Tune in for my next installment of what you should be doing to have a  spring cleaning for your business.


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