The annual renewal, along with any industry-specific licensing demands, is a legal requirement needed to keep your business in good standing. Besides the annual renewal, though, it is a good idea for businesses to have an annual meeting and have formal minutes prepared.
For those of us who own stocks, we know that we get notices every year of shareholder meetings. All businesses, whether they are an LLC with a single owner (known as a member) or a massive multi-national corporation traded on the New York Stock Exchange, should have annual meetings, or at least formal actions.
The purposes of these meetings can vary widely, but common issues addressed are to elect (or reelect) board members; approve payments to officers, owners, and employees; and, most importantly, affirm that the company is still active, operating, and a valid entity. The presence, or absence, of annual meeting minutes or actions is one of the major items examined by creditors if they wish to try to make the owners or officers personally liable for company debts, even if there is no personal guarantee. Annual meetings also document and ensure that silent or minority owners of a business have the chance to gain information about the company and have their voices heard.
Holding the meeting and preparing the minutes is not, usually, very difficult or expensive for small businesses. However, it is a very good idea and can be very helpful items to keep the business on solid ground with its creditors and owners. Therefore, they are well worth the effort and cost.