Corporate Compliance

small-business

Whether you are operating as a Limited Liability Company or a Corporation in Colorado, it is important to keep your business in compliance with statutory requirements so that your personal assets are protected from any liability that your business might incur.   Here is a checklist that will help you gauge whether your business is in compliance and if not what you might need to address.  

• Filing with secretary of state. Colorado requires that all companies file an annual report. If you are not sure about the status of your company go to the secretary of state’s website and make sure you are in compliance with this requirement. http://www.sos.state.co.us/pubs/business/businessHome.html
• Operating agreement or bylaws. While Colorado does not require that an LLC have an operating agreement, the operating agreement is critical in terms of both company management and asset protection.   Colorado does require that all Corporations have written bylaws.
• Company records. If your company is a corporation, Colorado requires that you keep the following items with your corporate records at your principal place of business:

• The Articles of Incorporation and bylaws
• Minutes from all director and shareholder meetings over the past three years
• All written communications to shareholders over the past three years
• A record of all actions taken by directors or shareholders without a meeting
• A record of all actions taken by a committee of the board of directors in place of a meeting
• A record of all waivers of notices of meetings of the shareholders, directors or any committee of the board of directors
• A record of the names and addresses of all shareholders, arranged alphabetically and by class of shares
• A list of the names and business addresses of current directors and officers
• A copy of the most recent annual report
• All financial statements for the past three years

• Separate bank account. Whether you are operating as an LLC or a corporation, you should keep a separate bank account for your entity and use it for all transactions. You should be able to document all moneys put into your entity in return for your ownership.
• Acting on behalf of the company. Any interactions you have in the course of doing business with other commercial enterprises or individuals should be clearly on behalf of the company and not as yourself individually. For instance, if I give a speech on estate planning I give the speech as Tanya Shimer of Tanya R. Shimer LLC and not just as myself individually.
• Written documents. Use letterhead on all of your correspondence and contracts.
• Entity designation. Always include the entity designation (“Inc.,” “Limited,” “Ltd.,” “LLC”) whenever possible on business identifiers such as business cards, advertisements, signs, etc.
• Your signature. Always sign documents in your representative capacity, and not as an individual:

YOUR ENTITY NAME

______________________________________________

by:  YOUR NAME, YOUR TITLE (Manager, President, Owner, etc.)

• Titles of assets. Ensure that all assets that are owned by your company are titled in the name of your entity and not in your name personally.
• Keeping money separate. Be careful to never commingle the funds or assets of your entity with your personal funds and assets.  If you need to fund the operations of your company with your personal assets, document the transfer as either a loan or a contribution to the capital of your entity.  If you need to use assets of the company for personal reasons, distribute the assets out of the company to yourself first as income, profit distributions, or a return of your capital contribution.
• Annual meetings. Whether you are a corporation or an LLC, annual meetings are required  This is one of the first things a judge will look for in deciding whether to allow a creditor or other to go after your personal assets.
• Corporate taxes and fees. Work with a professional to make sure that you are in compliance with all corporate taxes and fees and that your income tax returns are filed each year in compliance with both the IRS and the Colorado Department of Revenue.

While this checklist is not meant to be all inclusive its a good start and good self monitoring system for both you and your employees.  I certainly hope that it helps!  Don't hesitate to contact me if you have questions about your company and these guidelines.