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““Everything You Need to Know AboutEverything You Need to Know About

Maintaining Your Corporation or LLC”.Maintaining Your Corporation or LLC”.

October 21, 2009

E-Seminar / Conference Call

Hosts:Mark Kohler, CPA, Attorney At Law

Mat Sorensen, Attorney At Law

Special Guest:Holly Butterfield, Company Maintenance Department

www.kkolawyers.comTelephone 435.586.9366Facsimile 435.586.9491

© KKO Lawyers, LLP 2009

www.kohlereyrecpas.comTelephone 435.865.5866Facsimile 435.586.9491

© Kohler & Eyre CPAs, LLC 2009

www.numberwonaccountants.comTelephone 435.865.7820Facsimile 435.586.7702

© NumberWon Accountants, LLC 2009

Maintaining the Corporate Maintaining the Corporate Veil & Asset Protection. Veil & Asset Protection.

• What is the What is the Corporate Veil?Corporate Veil?

• Can the Veil be Can the Veil be Pierced?Pierced?

• Why is the Why is the corporate Veil corporate Veil helpful?helpful?

• Steps to Protect Steps to Protect the Corporate the Corporate Veil.Veil.

Inside Liability- Liability created inside the business. Goal is to Inside Liability- Liability created inside the business. Goal is to protect the personal assets of the business owner from the liability protect the personal assets of the business owner from the liability created in the business with the corporate veil protection.created in the business with the corporate veil protection.

Business entity

Business owner

1)1) Corporate veil provides that the business owner is not held Corporate veil provides that the business owner is not held personally liable for the debts or liabilities of the company. personally liable for the debts or liabilities of the company.

2)2) Corporate veil protection is available in an LLC, LP, or Corporate veil protection is available in an LLC, LP, or corporation. corporation.

Judgment

Corporate Veil

Protecting The Business Owner

Piercing the Corporate Veil

• Alter Ego Theory.• Pay personal expenses from business.• Failure to comply with State corporate

requirements such as Annual Meetings, Minutes, and Renewal.

• If you want the liabilities of the business to be separate from your personal assets you must treat the business as a separate and distinct entity from yourself personally as the owner.

How do I cleanup my Legalzoom How do I cleanup my Legalzoom entity?entity?

COMMON MISTAKES

Failure to file IRS s-election for an s-corporation. Corporations are all c-corporations by default unless you apply to the IRS to become an s-corporation by filing IRS Form 2553. This can be fixed if caught early.

•Failure to establish an operating or partnership agreement when partners are involved.

•Setting up the wrong type of entity for your business.

•Setting up your entity in the wrong State (e.g. Nevada).

•Failing to file a all of the required State documents.

Annual Minutes & Company Annual Minutes & Company MeetingsMeetings Why are Annual Minutes so Important? Why are Annual Minutes so Important?• Minutes are legal records that document actions Minutes are legal records that document actions

of a business and are used to approve business of a business and are used to approve business decisions made by the principals of the business decisions made by the principals of the business throughout the year.throughout the year.

• Annual Minutes serve as a track record to Annual Minutes serve as a track record to document what business has transpired for the document what business has transpired for the Company, reiterate who the current principals of Company, reiterate who the current principals of the business are, and to also mention any legal the business are, and to also mention any legal action taken against the Company.action taken against the Company.

• The Corporate Veil could be pierced due to failure The Corporate Veil could be pierced due to failure to keep complete annual minutes. to keep complete annual minutes.

To ensure proper minutes are To ensure proper minutes are prepared keep good records.prepared keep good records.

1.1. Keep all Corporate Documents in one location for easy Keep all Corporate Documents in one location for easy access and reference. access and reference.

2. 2. Keep a monthly journal of the Company’s actions and Keep a monthly journal of the Company’s actions and activities. It is easier to document monthly rather than try activities. It is easier to document monthly rather than try and remember what happened at the end of the year. and remember what happened at the end of the year.

3. 3. Keep a record of items you feel are important to list in Keep a record of items you feel are important to list in your annual minutes such as elections or changes of your annual minutes such as elections or changes of officers, shareholders or managers, employees hired, officers, shareholders or managers, employees hired, fixed assets purchased over $1,000, significant material fixed assets purchased over $1,000, significant material changes to the profit or loss of the Company. Any event changes to the profit or loss of the Company. Any event you feel is note worthy. you feel is note worthy.

When should you hold a Company When should you hold a Company Meeting?Meeting?

• Whenever the Company feels that it’s Whenever the Company feels that it’s necessary. necessary.

• Those involved in the Company should Those involved in the Company should make every effort to attend the make every effort to attend the meeting.meeting.

Items that may be discussed during Items that may be discussed during your meeting:your meeting:

a. Discuss Company changes and organizational issues.a. Discuss Company changes and organizational issues.

b. Discuss goals achieved and set future goals for the b. Discuss goals achieved and set future goals for the Company.Company.

c. Elect new Directors, Officers or Managers if needed. c. Elect new Directors, Officers or Managers if needed.

d. Discuss financial matters of the Company.d. Discuss financial matters of the Company.

Annual State RenewalsAnnual State Renewals

Most State’s have annual filing requirements. It is important that theMost State’s have annual filing requirements. It is important that the

Annual Report is filed on time and any filing fee’s paid to keep your Annual Report is filed on time and any filing fee’s paid to keep your

Company in Good Standing. Company in Good Standing.

What happens when the Annual Report is filed?What happens when the Annual Report is filed?

1.1. Company information on file with the State is confirmed or Company information on file with the State is confirmed or updated.updated.

2.2. Registered Agent information and Physical Business Address Registered Agent information and Physical Business Address information for the Company is confirmed. information for the Company is confirmed.

3.3. Officers, Managers or in some States Members are reiterated.Officers, Managers or in some States Members are reiterated.

4.4. Business purpose of the Company to be restated. Business purpose of the Company to be restated.

Examples of Annual Renewal Examples of Annual Renewal RequirementsRequirements

California: California:

• Corporations file a Statement of Information annually with a Corporations file a Statement of Information annually with a filing fee of $25.00.filing fee of $25.00.

• Limited Liability Company’s file a biennial Statement of Limited Liability Company’s file a biennial Statement of Information with a filing fee of $20.00.Information with a filing fee of $20.00.

Colorado:Colorado:

• Corporations file an Annual Report with a filing fee of $10.00.Corporations file an Annual Report with a filing fee of $10.00.

• Limited Liability Company’s file a Annual Report with a filing fee Limited Liability Company’s file a Annual Report with a filing fee of $10.00.of $10.00.

Arizona:Arizona:

• Corporations file an Annual Report with a filing fee of $45.00.Corporations file an Annual Report with a filing fee of $45.00.

• Limited Liability Company’s do not have an annual filling Limited Liability Company’s do not have an annual filling requirement at this time.requirement at this time.

When is the Annual Report When is the Annual Report due?due?

• Most Annual Renewals are typically due the month Most Annual Renewals are typically due the month the entity was registered within its respective State. the entity was registered within its respective State.

• Florida, Georgia, Michigan and North Carolina are Florida, Georgia, Michigan and North Carolina are just a few States that have a deadline different from just a few States that have a deadline different from that rule.that rule.

• In most States, penalty fees are assessed if the In most States, penalty fees are assessed if the AnnualAnnualreport is not filed on time. Your Company could report is not filed on time. Your Company could possibly even be Administratively Dissolved. If possibly even be Administratively Dissolved. If Dissolved by the State, all liability gets distributed to Dissolved by the State, all liability gets distributed to the owners of the business personally. the owners of the business personally.

• States used to send renewal reminders to Company’s via States used to send renewal reminders to Company’s via mail but due to economic changes, notices are becoming mail but due to economic changes, notices are becoming a thing of the past. a thing of the past.

• Annual Filing Requirements change all the time. It is Annual Filing Requirements change all the time. It is important to have someone you trust stay on top of these important to have someone you trust stay on top of these changes so that your Company isn’t in jeopardy of losing changes so that your Company isn’t in jeopardy of losing its good standing status. its good standing status.

Misleading Business Solicitations

Certain private Companies are sending Corporations and

Limited Liability Companies solicitation letters in several States. It is important to pay attention to any notices you

Receive.

How can you tell if the notice you’ve received is a scam?• Know your State Seal. Check the Seal on the notice. If it is not the

Official State Seal then the notice did not come from the State.

• Disclaimer statement on notice that states “the notice you are receiving is not from any State of Government Agency”.

• Know your State annual filing fee. The solicitation letters that are being sent are asking for a considerable fee to be paid.

Example of Solicitation letter

Example of Solicitation letter

California Customer Alert Notice

CCompany ompany MMaintenance aintenance PProgramrogramCMPCMP

Included in our Program:

• Review of Current Company status with the appropriate State agencies.

• Notify you when annual meetings are necessary and prepare the Director, Shareholder and Member Minutes.

• Ensure that the annual required States filings are complete.

• Serve as Registered Agent if necessary and/or make necessary changes to appoint a Registered Agent with the Secretary of State.

• Copy and maintain a master file of all corporate documents.

Annual Cost- $100.00 perCompany plus State filing fees. Registered Agent fees are dueannually and are in addition tothe CMP fees.

To enroll in our Program please call (435) 586-9366 or email us at cmp@kkolawyers.com

Thank YouFor more information, please contact us

at:

KYLER KOHLER OSTERMILLER & SORENSEN, LLPTel: 435.586.9366 Fax: 435.586.9491

www.kkolawyers.com