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We discuss the importance of keeping good business records and how to create good business records, including meeting minutes.

In today’s post, we’ll discuss why it’s important to maintain good business records, what records you should preserve, and how to produce meeting minutes.

What Are “Good Business Records”?

A “good business record” is clear documentation that captures important information at the time the information is created or exchanged (and a “generally better than nothing business record” is one created later to document something that happened in the past). Examples of important information that a business should document are agreements made between business partners, decisions made by the company, and information collected from customers. One of the simplest forms of a good business record is “minutes” created at or directly after a meeting documenting the discussion and decisions from the meeting.

Why Should You Maintain…

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Keeping good business records

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This post discusses attorney-client privilege and what you need to know about the concept to protect yourself and your business in a future legal dispute.

What is the attorney-client privilege generally?

The attorney-client privilege is the legal right that protects communications between a person and her attorney from compelled disclosure in a legal action. Attorney-client privilege is most often invoked when a person is asked to provide details of communications in a court proceeding or regulatory hearing, and it is codified in Washington as a rule of evidence. In a hearing, if a party otherwise entitled to the information asks for details or copies of communications and the communications are subject to attorney-client privilege, then the person being asked to disclose the information can withhold certain parts of those communications by claiming the attorney-client privilege. 

Why do we have the attorney-client privilege?

The attorney-client privilege exists because it…

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Attorney-client privilege quiet please

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In today's blog post, we'll discuss the non-waivable provisions of the Washington Limited Liability Company Act in more detail.

Significant changes to the Washington Limited Liability Company Act went into effect on January 1 of this year. As I wrote in a previous blog post on the Washington Limited Liability Company Act changes, the changes were intended to make the law easier to understand and give members more flexibility in how they want to manage and operate an LLC. Under the old act, the non-waivable provisions were scattered throughout the act. Under the new act, the non-waivable provisions are all listed in one place for convenience— in Section 25.15.018 of the RCWs. In this blog post, we’ll discuss the non-waivable provisions in more detail.

The LLC Act allows members of an LLC flexibility in outlining through the LLC Operating Agreement how…

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In today's blog post, we discuss the basics of how to complete an entity conversion in Washington state.

In a previous post, we discussed how the entity conversion bill passed by the Washington State Legislature in 2014 allowed companies to complete a conversion (instead of going through a merger) to change a company’s entity structure. You can use a conversion to change your entity structure to a different form (i.e. from an LLC to a corporation) or change your domicile to a different state. We continue the discussion about conversion in this post by going into more detail about the steps to complete a conversion.

Eligible Entities

Washington law allows conversions between domestic limited liability companies (LLCs), corporations, and limited partnerships. Washington law also allows these domestic entities to convert to foreign entities (a foreign entity is an entity incorporated in…

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Entity Conversion

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A cap table (or capitalization table) is a spreadsheet listing all of your company’s securities (stock, options, etc.) and who owns those securities.

A cap table (or capitalization table) is a spreadsheet listing all of your company’s securities (stock, options, etc.) and who owns those securities. Cap tables provide a basic look into the “total pie” and each shareholder and option holder’s piece of that pie (basically who owns what). More detailed cap tables will include formulas that allow the company to model future transactions. 

There’s no one-size-fits-all way to structure your cap table. Some provide only a general summary of the breakdown of ownership in a company, while others include extensive details about the individual holder, the type of securities held, issue dates, ownership percentages on a fully diluted basis, and other granular details.

When’s the Right Time to Build a Cap Table?

It’s relatively…

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Cap Table Pie

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Today we will discuss the frequency and type, notice requirements, and voting protocol of shareholder meetings in Washington State.

As a shareholder in a corporation it is important to know your rights. One of those rights is the right to attend shareholder meetings. Today we will discuss the frequency and type, notice requirements, and voting protocol of shareholder meetings in Washington State.

Washington corporations are governed by the Washington Business Corporation Act, which is codified in RCW 23B. Shareholder meetings are specifically outlined in RCW 23B.07.

Frequency and Type of Shareholder Meeting

The two types of meetings that shareholders attend are “annual” and “special” meetings. RCW 23B.07.010 lays out the requirements for annual shareholder meetings and is summarized as follows:

1) Corporations must hold an annual shareholder meeting;

2) Meetings can be held in or out of state but if the place is not…

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Shareholder Meetings

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In today's blog post, we discuss the recent changes made to the Washington Limited Liability Company Act.

Earlier this year, the Washington state legislature unanimously passed and the governor signed legislation making changes to the Washington Limited Liability Company Act—the most sweeping changes to Washington LLC law in recent history.

The Washington State Bar Association requested that the state make changes to the Washington Limited Liability Company Act. The bar association’s goal was to make the law easier to understand and more flexible by modifying provisions that the association described as creating pitfalls and unnecessary problems. The Washington state Senate and House eventually passed legislation making those changes, and Governor Inslee signed the law on May 7, 2015. The new changes will go into effect on January 1, 2016.

Some of the major changes to the Washington Limited Liability…

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Today's post highlights some important distinctions between corporations and LLCs to help you choose the right entity structure for your company.

It’s important to understand the significant (and sometimes subtle) differences between the various choices when determining the right entity structure for your new venture. Today’s post details some important distinctions between corporations and LLCs.

The Distinction Between State Entities vs. Federal Tax Elections 

For state law purposes, there are two primary entities that the choice of entity generally comes down to: corporations and LLCs. Corporations and LLCs both offer limited liability to owners of the company. This means that (absent extraordinary circumstances) if the business is sued, only business assets are at risk and the ownerss personal assets will be shielded from the company’s liabilities.

For federal tax purposes, there are three primary tax classifications that most companies are organized under: C corporations, S corporations, and…

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Liability shield

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Today’s post highlights some of the key considerations to have in mind when finding startup advisors for your company.

Startup advisors can be an extremely valuable resource for early-stage companies. Typically advisors bring startup experience, a large network of entrepreneurs, investors and other types of advisors, and sound business advice for growing your company. In today’s post, we’ve highlighted some of the key considerations to have in mind when considering hiring advisors for your startup:

Are They the Right Fit?

Perhaps the most important consideration is finding a person that understands your business and goals and finding someone that has industry experience and contacts that you can leverage strategically for the benefit of your business. They should also be someone you trust and that you know will give you reliable advice. It also helps if you get along with and enjoy…

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Startup advisors

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In this blog post, we'll discuss how to convert a traditional corporation into a social purpose corporation.

Yes, an existing Washington business entity can convert into a social purpose corporation (“SPC”). In this blog post, we’ll discuss how an existing traditional corporation can become a social purpose corporation.

To convert a corporation into an SPC, the company needs to take a few steps. First, the board of directors has to recommend the corporate action to the shareholders. The action must pass by at least two-thirds of the votes of the voting group entitled to vote on the corporate action. Further, the action must pass by two-thirds of all other shares voting as separate voting groups. Essentially, the SPC conversion statute controls over any existing arrangement in the corporation’s governing documents. So the corporate action to convert to an…

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social purpose corporation