Monthly Resolutions
Company resolutions are acts that the members/directors of a company resolve to ratify. Examples of resolutions are purchasing real estate, hiring an attorney or applying for a business line of credit. The reason why resolutions are important and why they should be documented is that they are vital towards substantiating the validity of your company’s actions. You may file your company annually, pay your dues and take measures to record your annual meetings but when it comes down to the nitty-gritty, even these steps to secure your company’s compliance may not be enough in the face of persistent IRS agents or litigious attorneys. The reason for this is that resolutions are the meat and potatoes of your annual minutes and they validate what you have resolved to do in the fiscal year and without them you leave kinks, or as know in the legal vernacular, exceptions, which are weak points that make your company exempt to it’s limited liability.
There are an alarming amount of businesses that already fail to meet required compliance so you can imagine how many more fail to do document their resolutions. Like I said in a previous entry, people do not want to see the negative, especially in business where they are conditioned to think positively and about success and abundance. Resolutions can also been seen in that manner as well rather than something to fuss over to avoid something they don’t want to think about.
One of the factors loan officers consider when granting a loan is if a company is being run properly and is compliant. Believe it or not, resolutions could help someone qualify for a larger loan or better interest rate because they show that the company is being taken seriously. Turn the tables and one can see how investors or those seeking a joint venture would be more willing to put money up front for your company if risk is minimized through proper documentation. When tax season comes along, imagine how pleased your accountant will be with all the tax deductions he or she will find in your resolutions that you possibly overlooked. Furthermore, all businesses need and exit strategy. Eventually you will either sell your business or someone will inherit it. Resolutions can actually add perceived value to potential buyers and how exciting would it be for your heirs to know that your legacy is worth all the blood and sweat you put into it.
