Certain Ohio Businesses Are Required to Maintain and Update the Statutory Agent

In Ohio, certain business entities are required to appoint and maintain a statutory agent.  The documents are filed with the Ohio Secretary of State.  A statutory agent may be served with legal documents, such as a lawsuit, so it is important to update and maintain the agent. The original appointment must be filed with the Ohio Secretary of State and is filed at the same time as the business formation documents. There is no fee for the original appointment of the agent.

If certain events occur, a business may be required to appoint a new statutory agent. These events may include death, resignation or change of the original statutory agent. If the statutory agent changes their address a business is required to update its filing to reflect the new address with the Ohio Secretary of State. The cost is relatively minimal compared to the consequences which may occur if a business fails to update and maintain its records.

Depending on your particular situation, the consequences may be a revocation of a license to conduct business in Ohio or cancellation of the articles.  If you need more information about updating statutory agents in Ohio, please contact Scott D. Simpkins or visit the Ohio Secretary of State’s website by clicking here for more information.

Why Is It Important To Maintain and Update Corporate Records?

The main advantage of a corporation is to protect the shareholders’ personal assets from the obligations of the corporation. The corporation acts as a shield, protecting shareholders’ personal assets. However, in some situations courts will ignore the corporate entity status and hold shareholders personally liable for the obligations of the corporation. This is known as “piercing the corporate veil.”

Some factors that courts look at when determining whether to “pierce the corporate veil” are: (1) Failure to observe corporate formalities; (2) Absence of corporate records; (3) Using a corporation bank account to pay for personal obligations; and/or (4) Undercapitalization.

Most lawsuits to “pierce the corporate veil” are filed against smaller, closely-held corporations and the corporate veil was “pierced” in 40% of those lawsuits. While the failure to maintain or update corporate records is insufficient on its own to “pierce the corporate veil”, it is an argument that has been successfully used along with other factors to hold shareholders personally liable.

So, it is important to maintain and update corporate records to avoid these potential problems in the future. Depending on your situation, you should create by-laws, issue stock, maintain and update corporate minute books and hold regular board meetings with all directors. For help on maintaining or updating corporate records or for more information, please contact Scott D. Simpkins at (216) 621-8484 or sdsimp@climacolaw.com.

Small Business Owners May Be Eligible For Income Tax Credits Up to $1,000,000

The newly-enacted laws, referred to as InvestOhio, authorize a nonrefundable credit up to $1,000,000 for qualifying investments in specified small business enterprises operating in Ohio. Any unused credits may be carried forward up to seven (7) additional succeeding taxable years. The qualifying investment must be made after July 1, 2011 to acquire an equity interest in a small business enterprise to be eligible. Corporations, pass-through entities, or other persons are eligible if the small business enterprise can satisfy all of the following requirements: (1) Either the total assets do not exceed $50,000,000 or annual sales do not exceed $10,000,000 at the time of the qualifying investment; (2) the small business enterprise employs least 50 full-time equivalent employees (or more than one half of its total full-time equivalent employees) that are in Ohio and subject to withholding of Ohio income tax; (3) Within 6 months of the investment, the enterprise invests or incurs cost for one or more of the following in an amount at least equal to the amount of the qualifying investment: (1) Tangible personal property (not motor vehicles) used in business and located in Ohio; (2) Motor vehicles purchased, registered, and used primarily for business purposes in Ohio; (3) Real property physically located and used in business in Ohio; (4) Intangible personal property (includes patents, copyrights, trademarks, service marks, or licenses) used in business primarily in Ohio; (5) Compensation for newly-hired or retained employees (excluding increased compensation for owners, officers, or managers) for who the enterprise is required to withhold Ohio income tax. To find out how this tax credit may benefit you or your company and for more details or information regarding InvestOhio, please contact us at (216) 621-8484.