Hold Your Family Board Meeting by Year-End!

People ask all the time who should be on my board of directors. I just came to me. It's the easiest thing. Who would you invite to Thanksgiving dinner? That's it. Those are your people closest to you. That's your board.

Well, well, well, well, well. Uncle Eddie has to come to Thanksgiving, but I don't want him on my board advisors. I am not taking him as advice.

Fair enough. Uncle Eddie. Questionable, but I think it's a great place to start. And yeah, sometimes the people you don't want advice from is your family. I get it. But if you want to write off the plane ticket or the cost of the RV for Uncle Eddie to come, you could put them on, not listen to them, but you got a write off.

Yeah.

You know, to have them there. Welcome, everybody, to another episode of the Main street business podcast. I'm here with the amazing Matt Sorenson on a topic we love the family board meeting. Oh, my gosh. I just. This is like one of my passion projects.

Yeah. And we think this is so important for your asset protection, for your tax planning, for the sake of your business and the growth and the future. We're going to get into all these benefits.

The list goes on and on.

There's seven.

Yeah.

You know, like David Letterman's top 10 back in the day. We've got the top seven. And it's better than David Letterman's top 10.

Oh, it is. This is going to be good. We're going to walk you through as well, how to do it, but. And why. But then seven benefits, direct and indirect, that come from this process. So let's just define what we're talking about here first. Why don't we do that? So what we're talking about is if you're a business owner. I don't even. Frankly, I'd even go with the point. I don't even care if you have an LLC or a corporation. You have a business. And you need to be doing better planning and communication with your family members. Now, this could be a spouse. It could be teenage kids, older adult children. It could be your parents, it could be your best friend. When I say family, I'm talking, who do you hang out with? Wouldn't you think it'd be helpful to share with them what your business is about and maybe get their advice and support? So we'll get into those benefits. But the point is you're holding a meeting regarding your business. And if you have an LLC or corporation, this meeting is your annual meeting. That could easily be on one sheet of paper with you could be more than that. We'll explain. But it's easily one sheet of paper of we're having a meeting. We're complying with state law, creating separation between our individual person and our business entity. We're going to put it in our corporate book and we're going to make sure we're compliant with the state on renewal fees or anything I need to do at the state website. But this process of the board meeting is kind of the impetus of that regulatory process that comes with having an LLC or corporation. And you don't have to be super rich family office Microsoft to do this. Every small business owner should be doing it.

Yes. Even if you've got a side hustle or a rental property, whatever it might be, think about this for your business. Once a year, I mean, Mark and I have certain companies, they have a lot of employees. We do quarterly meetings. We have one that's Friday. Yes, we have exactly. We have executive committee meetings in certain companies that are like once a week, that have minutes and stuff. When we're recording this and we're tracking this and we're getting input and we're discussing ideas and plans and everything. I think for the small business owner, a lot of times you just don't think about these things. You're like, well, I am the business, and it's small operation. Maybe I don't even have employees. But you know who's involved? Your spouse, if you got one, your other family members, your friends that you're talking about. And we're saying, let's just be a little more formal about this and at least do something once a year where you're going over these items that are critical for your business that are going to help you. And it's not just about the taxes and the asset protection. It's about being a better business owner, too, and planning and being more strategic.

So I guess that's what it is. And how you do it is you get all together, break some bread, you know, have some food, and you're going to sit down for 30 minutes to three hours or more and have this meeting that you document in writing. You do not turn that writing into the IRS or the state. It goes in your book, your corporate book that you all should have. This is a reminder that that one sheet of paper from LegalZoom may not be. No, it is not sufficient for an entity. And you want to be doing that.

Can I say there's two instances at least, where this comes into use and where you may actually be required to produce your minutes. Even for your llc in a corporation, you're required to do this by statute. But even an llc, most states are silent on whether you need to do this or not. But you're going to be asked for. If the IRS audits you, they're gonna ask for this. Like that's on the request list if your company gets audited is the annual minutes. The other instance is you have a lawsuit against you. The company ends up in court and you've got a lawsuit against the company. They're gonna say, hey, we wanna see the annual minutes. Why does a plaintiff's lawyer ask for that? Mark, why do they want the minutes of your company?

Have you been treating your company like your own personal bank account or treating it like a real freaking company? Yeah, well, the minutes tell the story. I would even say there's a third reason. You're going to maybe sell your business. Maybe you're going in for an SBA loan. Maybe you're getting going through annual reviews with a regulatory agency because of some industry issue. They're going to ask for this stuff. I mean, this could be a payroll audit. It could be maybe a doppel. A Department of Professional licensing issue. As a contractor, are you doing these meetings to show safety hazard, blah, blah, blah.

So funny you brought that one up because we have our company, Main Street Business Services, where we have a service that's company compliance. We do your minutes for you every year. We even give you templates. You're gonna be able to automate this and do it online after you hold the meeting.

It's super expensive, though. Yeah, it's $200. Yeah, I mean, sorry.

Bucks a year.

Yeah, sorry. Yep. Damage is done.

Yeah, we take care of it for you. Can also handle your renewal. Make sure your company stays in good standing through the year. So you don't have to worry about that. But we just had a client recently sign up for this. And you know why? The reason they did it, they were getting a line of credit and they're saying, we need your minutes for the last three years for your company. And they're like, my what? So they're like, can I sign up and can you help me do my minutes the last three years? Yes, we can help you get that stuff in order and get it going. Obviously get you going the right way moving forward.

And did you hear that, everybody? I'm telling you, it does not have to be expensive. And it can be really easy to do. We have an automation for this. We're rolling out before Christmas too. Of being able to do this on your iPad as you have your family board meeting. And we charge $200 a year for all these pieces and parts we're going to talk about here. But that's the process. So you're going to do this for a variety of important reasons. Go through it, document it. It's an internal document. It's there when requested. Okay, now let's start with these benefits. Why am I going to go through this headache? I'm going to go to the first one. That's probably the biggest motivator. I know we talk about asset protection and audit, but most of you are

like, blah, blah, blah.

You know what I love? This is a freaking awesome tax write off. You're going to meet maybe in on a Thursday in November, have an important board meeting, fly in your board members and have an important board meeting and oh, have some turkey dinner after and write off the whole damn trip. Because you flew in board members, you're having potential Airbnb down the street of all your board members. You're going to go to Costco and buy all sorts. I love yams. I'm a big yam fan.

Yeah.

Really?

That really goes over well at a board meeting.

It does. Board meetings, turkey and yams, always a winner. Better decision making. And you get to write it all off, people. That's what I'm talking about. This is a tax deductible event. And if you do it legitimately on a regular basis because you need to as a business, every time you do it is a write off. We're just saying do it at least once a year. But I love that as my number one reason.

Yeah. And I think for many of you, they're like, well, who's on my board? I mean, who's coming to this meeting? You know, in a corporation, you actually have a formal thing in a lot of states called a board of directors, where if you have, let's say an S corporation is an actual corporation, you put these on your corporate documents. We would have done that in our law firm, KQS Lawyers. When we're setting up your entity, who do you want on your board? We at least want to get your spouse on there. Mark talked about maybe you've got some adult kids or you've got the grandparents, the parents, you've got the family, the brother, the friend, whatever, we add them to the board. But even you LLCs, you can have what's called a board of advisors. They're not really a director. LLCs don't have a board of directors in statute. Now many LLCs that are big companies have a formal board that they adopt that has actual authority and responsibility and they get a paycheck and stuff like that. But you can do a board of advisors, which is very common in small businesses where we say, hey, these are the people. I want their advice and input. They don't have authority over me like a, like a board of directors, but they have advisory roles and input where they're involved in the business. I get their input. We're going to meet at least once a year as we're talking about here, have an annual board meeting of these advisors. And so. And those people are going to be in the minutes when we establish an entity at KQS Lawyers in our law firm. We are going to ask you, who do you want on your board of advisors? We want. They're going to be on the documents from the beginning so you can have them at the meeting and expense their travel. Their participation.

Wants to be over here smiling. I am dying to share this. I've got a new idea and I love it. And Jolie, this has got to be on our social media. Coming up here is people ask. People ask all the time. Who should be on my board of directors. I, I just came to me, it's the easiest thing. Who would you invite to Thanksgiving dinner? That's it. That's it. Those are your people closest to you. That's your board. Who would come to Thanksgiving? Your best friend, your brothers could be on your board. Could be.

Well, well, well, well. Oh, Uncle Eddie has to come to Thanksgiving. But I don't want him on my board advisor. I am not taking him as advice.

Fair enough. Fair enough. Uncle Eddie. Questionable, but that. I think it's a great place to start because people are like, well, I'm single or I'm this or I'm that and my family. And yeah, sometimes the people you don't want advice from is your family. I get it. But I think we could start with who's on the Thanksgiving.

Who do you want at the things of. Not who's coming, but who do you want. But there are some, you know, but

if you want to write off the plane ticket or the cost of the RV for Uncle Eddie to come, you could put them on the board and just not listen to him. You know, it's just like, oh, what do you think? Eddie? And then, and then, you know, but you got a write off.

Yeah.

You know, to have him there.

I, I can get behind that because

I want to get him something real nice.

Yeah. I bought you Something. I bought you something, Clark, with your money.

Well, it's a tax write off now because, Clark, you're here for the board meeting.

There you go.

All right. Now that's one of my favorite reasons is this is a tax deductible event, but I think the primary. Oh, and this is a two and three are super close. Do you want to go with asset protection or IRS audit proofing?

Yeah, so close. Let me elaborate on the asset protection here. We, we touched on that a little bit. And you know, if you were in a lawsuit, let's say this is your LLC in a lawsuit and something happened in the business, you get sued and there's some plaintiff. And one of the things that a plaintiff's lawyer is going to try to do is say, hey, this LLC doesn't have a lot of assets. Right? This is an operating business. It doesn't have a lot of assets. Or maybe it's a rental property and there's not a lot of equity there. Like, I got a million dollar claim here. I want to go through this LLC called Piercing the Corporate Veil. And I want to come after you personally. One of the things we've seen in cases over the years when a lawyer's trying to do this, and this is in the cases that are reported, too, is they will. One of the things they'll ask for is they'll say, where's the company minutes even for LLCs? Or your corporations say, we want to see those. Because that's one factor that shows you treated this business separate from your personal assets and what you do personally. And if I can show that the business had annual minutes, it had at least an annual meeting. I'm recording what's happening there. We're talking about business stuff, by the way. We're talking in just about this Thanksgiving meeting, we're talking about having a real conversation about the business and getting people involved, touching bases them through the year.

Okay?

We're talking about writing this stuff off and we're having fun here, but, like, we're serious. Like, this is an actual meeting. You're gonna have an agenda. Okay? And. But those meeting, those minutes show, hey, court judge, I treated this business like a separate business. I kept my bank account separate. I kept my expenses separate. I had actual minutes when I did my annual meeting. And that defeats this claim of them piercing the corporate veil, which means their lawsuit, if they win, gets stuck at the LLC and all your personal assets and other companies are not affected by it. So it's. It's really this preventative measure. We're doing to ensure asset protection in the event of a lawsuit.

And so cost effective it is. It's just funny how people want to run out and set up a Wyoming entity or some Rockefeller Trust or I'm going to set up all these elaborate structures and they don't even do minutes on their basic LLC that owns the. Right. That's, that's the front line. It's. I've got to find a great metaphor to explain how ridiculous that is. But okay, number three reason here and benefit is IRS audit proofing of your tax return. Because if you're a business owner, the IRS requires that you have what are called accountable provisions. These are provisions that you can attach to your tax return or document in your company minutes. And a lot of accountants are going to miss this. And especially if you're knocking out your return on TurboTax, you're not going to put in these provisions. So Street Business Services, we make sure there are six or seven different accountable provisions that are always included. For example, I want to write off my home office. Please reimburse me. I want to write off auto expenses of any board member or family member that's helping in the business. Please make that happen. Third, I want to write off any expense under 1500 dollars immediately with having. Without having to depreciate it. Boom. In this is the de minimis accountable provision. So all of these little provisions need to be in your minutes. And if you get audited, the irs, you have this provision. It's not in your tax return. Yeah, it's right here in my minutes. Oh, done. If you don't have this provision on your tax return or in your minutes, they can disallow medical reimbursements. The home office, the auto, the write. This is serious. So we want to make sure that you don't have a problem with the IRS in an audit and it's just a no brainer. So that, that would be my number three reason. I just love knocking this out.

A lot of bang for your buck in that one because we're all trying to write off stuff that we can. The business. Of course the other thing that let's talk about here is as an entrepreneur, sometimes it's lonely, you know, as a small business owner entrepreneur out there doing it. You may not have a big team or you know, this, this board of directors with these former CEOs or entrepreneurs that have been super successful and. But what you do have is definitely some family members who are invested in your success who are hearing about the struggles in your business. This could be the spouse or other family member or friends that are close to you. It's like having this meeting where it's a focused conversation, there's an agenda, and you're going to document this gives us like some formality to it, and it shows the importance of what you're trying to do, the input that these family members can give to you. I think it creates this unity amongst your family and friends that are involved, that are cheering for you, that want you to succeed, and also an opportunity to get their input and get their insights. Sometimes we can get so down the rabbit hole in our own business, we don't see the forest through the trees, so to speak. And getting that input from those outside the business, that see what we're doing, that know what we're up to, that understand our business, who our customers are, what the dynamics can be. It's. It's nice to have a little formal conversation about that for the business.

Yeah. And we've kind of dissected there's two points here. This first one I'm going to even add to with education. It's a chance to educate your children, adult or under age 18, whatever the case may be, to teach a. You know, okay, everybody, buckle up. I'm going to have you talk about something super uncomfortable in your board meeting. It's called money. You can talk about money as a family, it's okay. You can talk about debt, you can talk about how to make ends meet. You can talk about struggles you're going through. And maybe, just maybe, your family would appreciate hearing that so that they can learn from it and grow from it. Because someday you may want to sell your business to them or you may need their help. So education. Our kids do not hear us enough. For those of you who are parents out there, how many of us wish our parents would have talked about money a little bit more? Yeah.

Even like a budget, like, going through. What's the budget for the business for this year? What's our estimated budget for next year? Them seeing, like an income and expense thing is so important and valuable. I would love to have that conversation in a family business when I was younger to understand that. Because they can apply it to their personal lives and this leads to the next thing.

You may think, my kids aren't going to want to do this. You will be shocked. I can get emotional, start telling some of these stories. But when you start to have this meeting, your kids, they freak out. They're like, oh, my gosh, this is awesome. We've been wanting to have this conversation, I'm saying nine out of 10 kids, some of the kids are there, you're kicking and screaming. But all of our kids and their spouses, we're going to have our next board to be probably 12 to 15 people and grandkids are running around screaming and yelling, whatever, try to get them quiet. But they're all anxious to have this meeting and learn your children are smarter than you realize and they watch and they need to hear this. So I think you'd be surprised. Now the next one, I love where you're going is this kind of planning, you kind of alluded to that like this can hold you accountable too.

Yeah. And I think like the, the business continuity here, like what is the future and long term vision of the business? And when I'm having that family board meeting and my kids are exposed to it, they understand what's going on in the business, what we're doing well, what's working. Sometimes your family's working in the business. I mean my kids have worked in my business part time on and off throughout the years. I know Mark's have as well, like in a, in a more formal role. And so. But having that, that meeting is really important because one thing we see, and we've been doing this a while now, you know, we're the lawyers that have been doing, put in the 10,000 hours, 20 years, you know, we've been, we're going after this. Helping clients across the country is. There's a certain point where it's like, what am I doing with my small business? Is the next generation taking over? If it is, it's maybe one of my kids that's had a W2 job somewhere that doesn't know what the hell my business even does. They've had zero exposure to it. They don't know what we make. They don't know what the challenges are. They don't understand who the typical customer is. They don't know how I'm marketing it. They don't know the service or product mix that I even have. But if you had the family board meeting and you're involving them in it, they might have more conversations when you're out on the golf course with them, when you're playing tennis, when you're like doing yoga, whatever your thing is, I don't care what it is like you might actually be talking about the business because they know what questions they ask. You can have a conversation with about them. And that is a nice thing because it can help get them involved in the business and it can Solve. One of the biggest challenges you're going to have is this continuity planning and who's going to take it over.

Yeah. And I. Oh, my gosh, I love it. And the business continuity plan should be set forth in your estate plan. Heaven forbid you die sooner than later. We don't know when that moment's going to be, and we need to plan for it. And having conversations like this prepares your family, too, because a lot of families, this is a weird thing too. With the All Asset Summit last weekend, and if any of you haven't watch the recordings of that, you can go to alt assetsummit.com we had a panel and Matt, you said something really interesting. He was a moderator for it. He said a lot of wealthy people don't like to talk about their wealth. And there could be a lot of reasons for that, you know, being modest or private and all that. Get it? But we were able to get three individuals to come up on a panel and say, okay, we've built over $10 million Roth IRAs and. And they were very sheepish and we had to drag out examples out of them. But everybody in there was enthralled. They're like, please tell us how you've done this. And so I think again, when we're able to open up and talk about our wealth and finances or whatever level of wealth it is, or even the mistakes we've made, the people on your board are going to see that as a strength and be able to be a better support to you.

Yeah, totally. And I, yeah, I'm just like, man, when is mine scheduled by year? And I got to get on this.

I'm going to summarize the seven here in one moment. I'll let Matt hit our last one. But I wanted to just say on this planning point, not just business continuation planning, but next year's planning, like, what's the plan? And Matt alluded to budget, too. And so you're going to have a moment where you're going to be teaching the families, you know, unity and education, but then you're going to turn around and go, here's my plan. Now that's scary because you're going to tell someone what you plan to do, and the next time they see you, they're going to ask you how to go. You don't want to do that. I know, but it's going to hold you accountable. It's super important. Talk about your trifecta. Build your trifecta with one of our lawyers. You can do a tax comprehensive plan. The lawyers Will build your trifecta in color. They are so freaking cool looking. Put it up on the board. Show the family. Look at my trifecta. Their eyes will be as big as saucers, and it's just so fun. So I just think there's so many ancillary benefits. Yeah.

And I think what we're trying to do here is, you know, the wealthy, so to speak, have this institutional family office. And so many people have been like, oh, the family office of so and so, you know, and like, this is what we're talking about here. This is turning into your family office, guys.

Okay.

Your small business main hustle side hustle, rental property.

I.

Whatever it is. There's different scales of this, of course, is this is your family office. These conversations, the people in this board of directors meeting. Some of our attorneys sometimes drop in on some of these board meetings. You know, they call in sometimes. Of course, it's not the regular thing, but then you got to pay for that, of course. But, you know, if you have a bigger operation or stuff, like, we can be participating in that, too, or other advisors that may be involved in the business. The other thing here and final point that I'll just say on this is, you know, we have a company compliance service in Main Street Business Service, because you might be overwhelmed by this. You might be like, oh, my gosh, I got to be doing this, what these guys are talking about. But I don't know what to put in the minutes. Mark just talked about some accountable plan stuff. He throw out some tax code provisions and numbers and stuff. I'm like, I don't. I got to go back and watch this in the podcast. No, don't worry about it. Okay. This is included in the service. All right.

Yeah.

It's 200 bucks a year for your entity. Now you're doing your board meeting, but we have also, like, sample agendas and stuff to help you through this stuff. I know, Mark, you've done, like, the printed agenda, you know, for your family members, where they showed up, where it's on the table, everyone comes, they got their pens right. I'm like, try to have some formality to this to, like, really make it stick of the importance of this. But we're here as a support for you. We do have a service for this and Main Street Business Services. Whether you're using this or not, we want to just get you bought in on this concept. The important of this for the business, it will help you save taxes, it'll protect your assets, but better than anything else in this It'll help your business.

Yeah. And this company compliance component is the fact in at least over 43 states, you've got to pay an annual fee, you've got to fill out some piece of paper to stay in good standing or go on a website somewhere with the state. And companies get dissolved involuntarily all the time. Involuntarily means you didn't do what you were supposed to. So the state shut down your LLC and clients come up and call us every day. We get a phone call. Can you get my LLC back up and running? What do I need to do? You need to do your compliance. You need to hold your minutes and we walk you through it and we help you do it.

200 bucks and we do it for you. We track it so you don't even need to do anything. We automatically do this for you, renew your entity with the state and help you get your minutes down. Of course.

Okay, so here's the seven benefits that. Matt, you can take us out. Number one, company compliance taken care of. The state knows that my entity is still in good standing. Check. Number two, better asset protection. So that if I ever get into a lawsuit, I have can produce my minutes and show the corporate veil. Check number three, IRS audit proofing. I'm going to have all the provisions I need for the IRS to make sure I can take advantage of any tax write off for my small business. Check. Number four, family unity, vision, education, bringing together everybody, even Uncle Eddie. Number five, I'm going to get a tax deduction for holding this dumb thing. I'm going to be able to take travel write offs, Airbnbs, Ubers, food, all of it is a write off. The day to get there, the day to hold it, and the day to send everybody home. All three days are a write off for travel and dining purposes. Check. Number six, the business continuation planning. Making sure that the family knows what to do with the business or the real estate or the rentals or whatever the hell you're trying to build. You're documented, put it in your estate plan and letting the family know your wishes to help them if something happens to you. Check. And finally, number seven, you're getting support, you're getting advice and you're laying forth your plan and budget for the next year and you're going to be held accountable for that. And your family's there to hopefully support you. Kick them off the board if you don't like them.

The end.

Check.

All right, well, we got through that. The top seven list here. Why you need to have a family board meeting by year end. This Think of this as your family office as you're building and growing. This. If you found this helpful, please share it to that friend or family member that might be a business owner too. We think this is an incredible idea and concept and we want to be a support to you. Hopefully these ideas are helpful to you and please share the podcast subscribe if you haven't already, give us the thumbs up five star review, whatever it is. If it's negative, you know, maybe just go yell it outside. You know, just get it out. If you thought this sucked. Well, if you're still listening to this and you think this sucked, I think

you liked it, you're still watching and you can get to mainstreetbusinessservices.com main street business just main street business just mainstreetbusiness.com that's right. We have all the URLs, but go mainstreetbusiness.com get over there, sign up all your entities, get it done, off your plate, taken care of, and we'll see you next week for another episode. The Main Street Business Podcast.