Established LLCs should stay on top of records to maintain protection
After starting an LLC, business owners must ensure that they maintain liability protection. Nina Kaufman offers a strategy to help owners secure their corporations in her small business legal series on Startup Nation.
Kaufman advises that entrepreneurs must treat their corporations as independent entities in order to protect their personal liability.
A corporation also needs to issue stock, keep corporate records, keep corporate funds separate from personal funds, elect officers and directors and maintain sufficient funds.
Maintaining the proper paperwork is essential, Kaufman urges, because a corporation has to officially authorize directors to make decisions, even if there is only a single owner.
Major decisions need to be documented. These include all transactions outside of ordinary business, joint ventures, loans, leases, mergers and employee benefits.
Maintaining good business records has numerous benefits and increases entrepreneurs’ chances of success. It allows them to monitor progress, keep track of tax deductible expenses, prepare accurate financial statements and, in case the IRS ever checks in, they will have all of their documents ready.
Business owners who have done the work of filing an LLC should know that now is not the time to become inactive. Instead, they should become vigilant record keepers so their corporations will last.