SPONSOR

Making changes to a sample plan by changing the names and numbers is always a bad idea because they can get you into more trouble than not having one at all. How?

Directors Liability

If you are incorporated or plan to incorporate you will want to learn about your directors liabilities. Typically the president and treasurer are considered the directors of a company. A vice-president also can be a director if specified by your corporate bylaws.

Directors have a fiduciary responsibility to act in the corporations' best interest. These obligations are seen as important as those between a trustee and a beneficiary. For example, the Princeton WordNet defines a fudiciary as a person who holds assets in trust for a beneficiary; "it is illegal for a fiduciary to misappropriate money for personal gain".

A director's position is a very serious matter - I know of a client in Canada that went to jail based on this concept. Even though his manager embezzled the money and disappeared - the court held that he and his partner as directors of the company were responsible for ensuring that the manager was managing the affairs of the company correctly. Their defense of trusting the manager and dealing in good faith did not hold up - they spent 18 months in jail.

Another example of a breach of ones fiduciary duties as a business owner would be to pay yourself before paying suppliers or the IRS.

Sample Business Plans Are too General

Just like a generic legal agreement that lacks specifics using a business plan template or sample plan without checking it's details cannot adequately identify risks, liabilities and runs the risk of getting the business and directors in troubl