The good news is that your small business is humming along. The flip side is that as company owner, you are facing increasing challenges and considerations, such as whether it’s time to expand your brand locally, statewide or even further or how to finance such an expansion, if you wish to pursue it. While you ponder what’s best for you and your enterprise, you still need to oversee it, and you might find yourself somewhat overwhelmed. One way to ease the burden of decision making is to create a Board of Directors for your company. If your enterprise is a C or S corporation, having a board of directors is compulsory. While laws governing corporations vary state to state, one constant exists: all states require that corporations form a board of directors elected by shareholders. State laws also govern how many members a board must contain. Federal laws also control certain corporate board matters, so it is wise to consult with an attorney expert in corporate law to ensure your board complies with all pertinent regulations.
According to the U.S. Small Business Administration, the typical board titles its leaders President, Secretary and Treasurer.
Moreover, at least one annual meeting must be conducted and minutes of that gathering, documenting what transpired during it, must be maintained.
Conversely, sole proprietorships and LLCs are not required to have a board of directors, although they are permitted.
Board duties
Knowing what a Board of Directors is supposed to do for a company can be helpful in determining whether your enterprise would benefit from one.
According to The Balance, a board of directors is responsible for steering the company in ways designed with accomplishing the entity’s mission.
A board of directors is charged with acting in the best interests of company shareholders. To do so, they make overall policy determinations and provide leadership. A board possesses a fiduciary duty to company shareholders to ensure the business is operated efficiently and effectively so the financial investments made by shareholders in the enterprise are profitable.
The primary duties of a board of directors include, but are not limited to:
- Respecting their fiduciary responsibility to care for the finances and legal responsibilities of the corporation
- Establishing the mission of the company while ensuring all corporate actions align with that mission
- Setting corporate policy based on the enterprise’s mission and vision
- Establish corporate by-laws
- Reviewing actions of corporate officers and executives to ensure they comport with the business’s mission and corporate by-laws
Tami Kamin Meyer is an Ohio attorney and writer who tweets as @girlwithapen.
