The Foundation of Compliance
Maintaining C-Corporation Status
One of the cornerstones of any ROBS strategy is the C-corporation structure, and adhering to its ongoing requirements is non-negotiable. Here’s a snapshot of what proper maintenance involves:
Board and Shareholder Meetings
You should hold regular board and shareholder meetings, documenting key decisions in meeting minutes. Neglecting these records can undermine your corporate veil and attract penalties during audits.
Bylaws and Articles of Incorporation
These must remain accurate and up to date, reflecting the actual operation and management of your business. If modifications become necessary, ensure proper filing and documentation are completed.
Payroll and Reasonable Compensation
Paying a business owner an excessive salary or failing to follow reasonable compensation guidelines are red flags for the IRS. Stay informed about balance limits to avoid scrutiny.
Need help ensuring your corporate framework is air-tight? Our in-depth guides (available to subscribers) include checklists to make this process simple and repeatable.
Addressing Evolving Rules
Both tax laws and ERISA regulations impacting ROBS are subject to updates. While many changes are minor, falling behind on revisions could lead to non-compliance.
Some points worth considering include:
Updates to corporate tax filing structures
Changes to employee retirement contribution limits or options
Guidance from the IRS and DOL targeting ROBS plan mismanagement
The key is not only to know when rules change but also to understand their impact on your business. Many ROBS users struggle to stay ahead here, which can lead to unnecessary stress and penalties.
The Bottom Line is: Keep your C-corp compliant by documenting board meetings, updating bylaws, and following reasonable payroll practices—neglecting these can lead to IRS scrutiny and penalties.
Looking for ways to stay informed about these shifting regulations? Our subscription plan offers real-time updates, detailed explanations, and tailored recommendations—ensuring you’re always one step ahead.