Small Business Ownership – Opportunities and Challenges
Ted Nolting and I recently met with a small group of professionals who are all members of the Public Relations Society of America – Independent Practitioners Alliance to discuss issues facing small business owners. We had a good Q&A about the benefits of certification as a minority-owned or woman-owned business as well as the process involved to obtain certification.
A few points of emphasis: There are reciprocal agreements status in some nearby states such as Illinois and Kentucky; for new business owners, in order to obtain certification you must prove your business has a likely prospect for success; and make sure your application is complete and accurate as a denial requires waiting 12 months before applying again.
We also discussed protective governing actions for your business. First, some of the steps necessary to avoid “piercing the corporate veil” in the unfortunate circumstance that the business is the subject of litigation. We stepped through the eight factors a court looks at when considering whether to pierce the veil: (1) undercapitalization; (2) absence of corporate records; (3) fraudulent representation by corporation shareholders or directors; (4) use of the corporation to promote fraud, injustice or illegal activities; (5) payment by the corporation of individual obligations; (6) commingling of assets and affairs; (7) failure to observe required corporate formalities; and (8) other shareholder acts or conduct ignoring, controlling, or manipulating the corporate form.
Finally, we covered the governing documents required (and recommended) for all small businesses. From articles of incorporation/organization, to bylaws and operating agreements, to buy-sell agreements, and often overlooked clauses in contracts (including venue provisions, prevailing party clauses, and recovery of interest).
If you would like to discuss how these issues affect your business, or if you would like us to speak to your association, please contact Steve Runyan or Ted Nolting. It would be our pleasure to assist you.
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