In the matter of all things legal, or potentially legal, it is best to respond quickly — do not confuse this with “react” quickly, as that can cause problems. Rather do your due diligence and respond promptly, and appropriately. If it is a legal notice, court documents, or even simple billing or finance matters. Responding to these issues immediately will go a long way towards a smooth process. When you delay, you can have automatic penalties go against you. The longer you let a legal matter go, the more difficult it is to prove your innocence, or even if you’re guilty, the worse deal you’ll be able to make. With billing issues, neglect causes accounts to start accumulating finance charges, penalties and collection costs – even if you cannot pay your bills, be in open communication early and often many of these fines can be reduced.
As a growing business you must learn from your CPA early on about how to interpret your Profit & Loss and Balance Sheets. These indicate the lifeblood of your company. Depending on your business you need to look at these at least monthly, if not weekly or daily! Additionally, as part of your corporations annual shareholder meeting, go ahead an prepare a financial review and prospectus, even if it is only for you. Look at other corporation’s filings – both large and small. This exercise will give you the opportunity to do some looking back, as well as forward looking based on past performance. It also gets a lot of your homework cleared out of the way when you’re ready to look for outside funding. Infact, even before you start looking for F&F financing (friends & family), you really should have something prepared to hand to them as well.
Probably the largest signficance,for a very small business owner, between a Corporation and a sole-properitorship, is the liability protection afforded by the corporation. However, in order to keep this liability protection solid, the most important piece to maintain is proper paperwork. Without maintaining the proper corporate stucture, backed-up my minutes, annual meetingss, etc., Failure to do this may permit a entity to “pierce the corporate viel” and go after you personally. Attemtpting to play catch up with your required paperwork is not only illegal, but very diificult after the fact. It is first, and foremost important to setup a structure to ensure your compliance going forward – mark it on your calendar, use an Outlook reminder, whatever it takes to ensure that you are providing a minimum of Director and Shareholder meetings at least annually. Also be sure to keep your finances in line and major descisions should be placed in the minutes. Paperwork is the number one killer of the “corporate veil”… You can try to run the best business, by the book, however you will either invariabily not know something and screw up, or you’ll have someone else attempt to sue you over something frivelous, yet still that protection will be required. You cannot control other people, so you need to ensure you are taking the correct actions to protect yourself and the corporation from libaility at all times.
