Business Planning FAQ
Questions:
Q: I'm the only shareholder, so why does my corporation need Corporate Minutes?
A: Taking corporate minutes is a government written record requirement even if there is only one shareholder. During an audit, the IRS scrutinizes your corporate minutes (or lack thereof) for discrepancies between the corporate resolutions adopted by the Shareholders and Board of Directors and the true actions of the corporation. You can also lose tax deductions and benefits if you do not conduct meetings that adopt resolutions supporting the actions taken by the corporation. Most importantly, the status of a "separate legal entity" for your corporation can be discredited. Without an accurate corporate minute book, the IRS, the courts, and other taxing authorities may allow creditors, plaintiffs, and other entities to sue you personally for debts and actions of the corporation.
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Q: I just set up a new company and I am not making that much money. Do I need to set up an LLC or Corporation?
A: An LLC provides its members with so-called "limited liability" whether the business is ran out of the home or valued at multi millions of dollars. This means that you have no personal liability for any of the LLC's debts, liabilities or other obligations. This limited liability protection is similar to that enjoyed by shareholders in a corporation. An LLC in Michigan is the easiest way of separating your personal life from your business life. The limited liability shield does not protect you from personal responsibility for all of your actions conducted on behalf of the LLC, however. You should consult with an attorney before setting up an LLC.
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Q: In this market, I can't sell my second home without taking a major loss. Are there any options out there other than foreclosure?
A: Sure, try leasing your home to a tenant with an option to purchase. This two part agreement should preferably be set up inside one agreement. There are numerous considerations when deciding to rent out your home so make sure to consult with an attorney before doing so.
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