Once you've chosen the type of corporation you want for your business, most entrepreneurs are ready to stop worrying about the details and move onto more pressing matters, like developing your product or service, however, there are a few more corporate formalities that must be addressed before proceeding. As a corporation, you'll be required to hold annual meetings with your shareholders which must be documented. Also, while this isn't required for LLC's, it's still a good idea; if you ever do run into trouble with your business (IRS audit, legal matters, etc) the more documentation you have, the better. With corporations, neglecting to properly document these annual meetings can lead to what is commonly referred to as "piercing the corporate veil" which can lead to you, your partners and shareholders being held personally responsible for the debts and liabilities of the business, rather than being shielded by the corporation. Although this is uncommon, it is a definite possibly when a corporation is mis-managed.
At this point, the high-D, super driver, entrepreneurial leader in you may want to check-out or simply hire someone to take care of all of these details, and that's really a great idea. A board of directors is responsible for overseeing the activities of the corporation, but this typically does not mean that they can overrule you when it comes to product decisions. Giving up the decision making power can be a scary proposition for an entrepreneur, but hopefully if you are able to choose the right team and setup the bylaws appropriately, you'll be able to continually innovate and drive the company while the board of directors watches your back, weighs in on important decisions and protects the company and its shareholders from additional liability. Additionally, pursuant to the Sarbanes-Oxley act (SOX), many corporations will also employ internal auditors who will ensure that the company is completely above board with all of it's legal and financial actions, this is more important now than before SOX because now board members can face large fines and prison time in the case of accounting crimes.
Coming up with a great idea for a new business and actually launching it is a great achievement, and continuing to develop and innovate is what entrepreneurs live for. The corporate minutia shouldn't grind your business or corporation to a halt and that's where finding and employing the right people that you can trust will make your business more effective and more importantly, keep you, your partners and your shareholders safe.
Read more about Next Steps For Your Home Based Business As A Corporation
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