Keeping Records: Why You Need Corporate Minutes
As any business owner knows, it’s always good to have stuff down in writing. And in some cases, the law requires it. As your business starts rolling, the state asks that you hold regular meetings for directors and shareholders. Whatever official actions are taken or decided upon at these meetings need to be jotted down as your corporate minutes. Corporate minutes not only help you stay compliant with state rules and protect your corporate liability status, they also give you a neat and tidy record of your organization’s major decisions.
Most states require annual shareholder meetings to elect the board of directors, and some corporations also require regular meetings of the board. You’ll need these top decision makers together in a room to tackle the big topics that help your business stay competitive and lucrative. But before you start stocking up on legal pads, keep in mind that not every company meeting needs official minutes taken. Routine business decisions don’t fall into the corporate minutes category--only these official gatherings where the board of directors or shareholders are there. States are especially interested in documentation when shareholders also sit on the board--just so it’s clear that everyone is playing fair.
What exactly needs to be covered by corporate minutes? Issuing stock to shareholders is one. Another is purchasing property or approving a long-term lease. You might be adopting a new pension plan or stock option program. Then you have employee salaries, corporate mergers, electing corporate officers and other official business. Detailed corporate minutes keep a tally of what’s talked about, voted upon and ultimately decided by everyone. And the paperwork itself protects the legal status of your corporation in case any legal issues come around the bend.
Taxation is another reason to be as detailed as you can with your corporate minutes. If you or other company stakeholders charge travel and other expenses to the company, your records can keep everything on the up and up in case the IRS has any questions. And of course if your corporation status is on shaky ground because you lack corporate minutes, your tax status might not have the same benefits as you enjoyed before.
Corporate minutes are also beneficial for the business itself. If any disputes arise between directors, shareholders or officers of the company, you can always go back to the corporate minutes and be able to explain why a particular decision was made and who okayed it. Solid written documentation about the changes and motions of the company can also serve as a nice snapshot of the entire history of your organizational structure. All in all, a little time invested in your record keeping will save you hassles down the road and allow you more time to grow your enterprise.
Drop by RocketLawyer.com today and get started with our free corporate minutes template.
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