Operating procedures for companies
The corporation must keep an accurate account of all meetings held by the board of directors or special meetings held by the shareholders. These accounts, or notes, are known as "minutes," and are kept in the company's "minutes book." The care and accuracy of the minutes is the direct responsibility of the Company Secretary. It is important for the trustee to keep accurate and accurate minutes, as these minutes can be invaluable against attempts to disprove the institution's separate legal entity status by regulators or other agencies.
All contractual agreements entered into by the company must be memorialized, at the corporate level, in writing, with the express approval of the Board of Directors. This includes all financially binding agreements (loans, lines of credit, etc.), acquisitions (real estate, other corporate entities, capital equipment, etc.), and employment (with employees, etc.). Failure to properly engage other entities or potential employees may result in severe tax or tax liabilities and, in extreme cases, may jeopardize the organization's separate legal entity status if there are repercussions on an employee or board member's use of the company or its assets as his alter ego .
The company's board of directors must meet at least once a year. These meetings are required by all 50 countries, and are the formal meeting during which important strategic corporate decisions are taken, such as large acquisitions, mergers, strategic or contractual agreements with other entities, etc. In addition, it is usually during these meetings that decisions are made regarding corporate leadership, where officer positions are confirmed, changed, and even where a president or CEO is appointed. Attendance is a must by all members of the Board of Directors, unless written consent to waive proxy voting for another member of the Board has been given by the absent member.
There will be no mixing of corporate funds. This means that the private assets of a director, officer, or shareholder of a company must not be mixed with company or company funds. Mixing can occur via simple actions such as paying company bills directly from a personal checking account or, conversely, paying a personal car loan from the company's checkbook. These types of actions undermine the company's separate legal entity status, and can lead to direct personal liability or the loss of personal assets in the event of litigation, tax or collection proceedings.
Formal operating procedures for companies
Corporate funds should be kept separate
Apart from personal funds: a corporate entity must have its own bank accounts (including checking, lines of credit, etc.). Not keeping these funds separate, also known as "mixing," can lead to increased scrutiny and potentially serious liability in the event of an IRS audit while putting personal assets at risk. It is a best practice measure to not mix funds.
The board of directors must meet at least annually, and usually keep a close eye on shareholder meetings (also known as "special meetings"). All fifty states require a meeting to be held at least once a year, and these annual meetings must be used to approve transactions entering into the corporation, and in lieu of any particular director being present, written consent must be provided by said director (either in a form of waiver in the case of lack of proper notice, or in the form of a proxy vote given proper notice) of any decisions made at these meetings. Shareholder meetings, also known as “special meetings,” can be held at any time. The Foundation Secretary is responsible for providing proper legal notice to these meetings, maintaining necessary waivers, proxy, minutes, etc.
Notes of board meetings or special meetings” is necessary and is the official and legal record of such meetings. Company minutes should be kept in date order in company minutes book, asset value can be in protecting the assets of directors, officers and shareholders of the corporation. Maintaining these minutes in an orderly manner Proper and timely matter is necessary to defend against IRS audits and alter ego claims.Directors and corporate employees will at times seek legal advice during annual meetings, and any discussions during these sessions are considered privileged conversations and are protected by legal doctrine and attorney-client privilege.
However, minutes taken from these conversations are considered part of the company's record, and therefore care should be taken, by the company secretary, to note when such communications occurred by citing them in the company minutes as "conversations by directors and co-legal counsel". in conversation with legal privilege at this point” rather than referring to the actual conversation.
Written agreements must be executed for all transactions and maintained, and all transactions involving property leases, loans (whether internal or external), employment agreements, benefit plans, etc. that are entered into by or on behalf of the organization must be written.
Limited Liability Company Operating Procedures
LLCs are becoming more and more popular as an excellent organizational tool for a company to do business, for a very good reason. They offer undesirable flexibility in terms of management and operation, excellent protection from liability, and offer profound tax advantages in the form of pass-through taxes. There seems to be an almost scramble on the part of some states to attract corporations in general, and LLCs in particular, in the form of very favorable business and legislative moves. However, there are some operational and regulatory steps, sometimes known as "LLC actions," that must be taken and adhered to in order for members to enjoy all the benefits of limited liability and taxation afforded to an LLC.