If you conduct your business as a corporation, you need to maintain it. A major reason for doing business as a corporation is to create a shield against personal liability. A shareholder is not normally liable for corporate actions. Failure to properly maintain a corporation, though, may wreck the shield under a doctrine known as "alter ego." Another reason for maintaining a corporation is simply because the law requires that you do.
At a minimum, corporate maintenance should include:
A. Conducting at least one shareholders' meeting during each year. The corporation's bylaws will state when that is to happen, how to notice the meeting, and how many must attend. Create and keep the minutes of the meeting in the corporation's records. Any material action, including for example any loans between the Corporation and its shareholders should be documented in the meeting minutes. The directors of the corporation need to be elected (or re-elected) at least once a year at a shareholders' meeting. Note that the shareholders may dispense with an actual meeting if, instead, they all consent in writing to dispense with it. However, the shareholders also memorialize in writing that they did so, and write down any action taken without meeting, such as the election of directors.
B. Conducting at least one directors' meeting during each year. The corporation's bylaws will state when that is to happen, how to notice the meeting, and how many must attend. Create and keep the minutes of the meeting in the corporation's records. The officers of the corporation need to be appointed (or reappointed) at least once a year at a directors' meeting. Note that the directors may dispense with an actual meeting if, instead, they all consent in writing to dispense with it and, also, memorialize in writing any action taken without meeting, such as the appointment of officers.
C. Documenting any share transfers on the share register, and share certificates should be issued or cancelled as appropriate.
D. Keeping in force any licenses needed to operate the business, such as a local business license, for example.
E. Timely filing the annual statement of information required by the California Secretary of State. The Secretary should send a reminder approximately 90 days before the statement is due.
F. Paying the corporation's franchise tax to the California Franchise Tax Board each year. Failure to do so results in suspension and then termination. Neither a suspended nor a terminated corporation may defend itself in a lawsuit.
We at the Law Offices of W. Michael Young will be happy to answer any questions you may have about maintain your corporation, as well as preparing shareholder and director meeting waivers, and meeting minutes.