By: Barry E. Haimo, Esq.
February 19, 2018
Annual Reports and Meeting Minutes
You formed a business to separate your personal assets from your business creditors right? It’s called limited liability, and it’s the most common reason we find people organize their business with a business entity such as a corporation, limited liability company (LLC), limited partnership, etc. Protecting from creditors and limiting liability is more complicated than people think though. A business entity that respects the corporate formalities will enjoy limited liability from inside creditors, but not necessarily outside creditors (see below). A business that does NOT respect the corporate formalities may likely result in the officers, directors and agents being liable for the debts, obligations and liabilities of the entity. Shareholders can even be held personally liable for the liabilities of the business in some situations. That is discussed in a new separate post coming soon called Failure to Respect Corporate Formalities and Piercing the Corporate Veil. Below, please find a few posts for you to learn more about creditors. Meanwhile, this post addresses ways to remain complaint with two important corporate formalities.
Two important things to do to help maximize your compliance with the law is to file your annual report and conduct your annual meetings. People don’t fail to do them because they are difficult. They are just small things that usually do not have a significant priority in the day to day operations of a business that is navigating real challenges. We help businesses remain compliant.
Failure to File Annual Report
In Florida, annual reports are due no later than March 31. Corporations are $150 and LLCs are $138.75. They are late on April 1. If you fail to file your annual report on time, the fee is $400. If you still do not file your report after several more months, usually September 1, you will incur an even greater fee (usually $750) and your entity will be administratively dissolved, and that is bad. Here’s why:
Pursuant to Florida statute and case law, officers, directors and agents can be personally liable for debts, obligations and liabilities of the business that continues to operate after being administratively dissolved except to wind-up and liquidate.
We help dozens of businesses remain complaint every year. Let us know if we can help you.
Barry E. Haimo, Esq.
Strategic Planning With Purpose
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