As your Cincinnati company grows larger, it's easy for its leadership to lose track in managing all of its obligations. That's why it's important for there to be a corporate governance structure to be in place to help you manage internal and external aspects of your Ohio business.
Internal corporate governance
Internal mechanisms exist to ensure that there are clear hierarchies for reporting concerns, that operations move smoothly and that there are systems in place to measure performance. They're also in place to make sure that a corporation's managers, employees and owners, also known as its stakeholders, meet their goals or have their objectives met.
The internal governance structure that's in place should help you better monitor if your business is progressing toward its goals. It should also help staff to refocus their attention and get things back in order when they're not.
A restructuring of control, a redefinition of policies, an independent internal audit and increased management oversight are all examples of internal governance structure mechanisms that may be used by businesses.
External corporate governance
There are parties such as banks, unions, regulators and governments that may have objectives independent from your company's that they want to forward. These include such ones as legal compliance and debt management. They may impose regulatory guidelines, or have you sign a contract to make sure that you adhere to them.
External stakeholders often draft best practice guidelines for a company to follow but leave it up to the business owners as to whether to do so. Most times, the obligation falls to the stakeholders to report their compliance with their laws or regulations and to update their status as they satisfy debts.
When you have an idea that you'd like to get off the ground, setting up a business entity is important. If you fail to do so, then you put your personal assets at risk of being taken if someone is successful in suing your company. A business formation attorney can help you choose what type of entity to set up, draft a startup agreement and help you learn more about what corporate governance structures you should have in place.