Why Are Corporate Minutes So Important?

"Incomplete or inaccurate corporate minutes undermine tax planning and exposes clients to damaging IRS audits."

Michael Suverkrubb, Esq.

Why Are Minutes So Important?

Minutes are legal records that document actions and approve business decisions made by the principals of the business throughout the year.

It’s imperative to have a documented paper trail that separates the owners from the company.

State law requires corporations to prepare Annual Minutes of the Shareholders. Additionally, Board of Directors Minutes are necessary to document actions taken on behalf of the corporation throughout the year and serves as a track record to document what business has transpired and to confirm the approval of the officers and directors decisions.

Although some state laws do not require LLCs to have minutes, it is recommended to document the actions approved by the members and/or managers. Also, it is common in an LLC for the operating agreement to indicate a requirement to prepare Minutes.

Minutes include important items such as:

  • Annual Meeting of the shareholders
  • Election of or changing officers and directors
  • Changes in bank accounts (authorized signers, new accounts)
  • Filing for S corporation election
  • Recording tax decisions and benefits
  • Retaining professionals such as a CPA or lawyer

Without current and complete Minutes, the shareholders, officers and/or directors could be held personally liable for the actions of the corporation. Even worse, the legal protection could be in jeopardy if a creditor successfully pierces the corporate veil due to the corporation’s failure to keep complete Minutes.

A corporation may be disregarded if it does not maintain a separate identity from its shareholders through corporate formalities. In fact, there are over 80 reasons the courts can disregard the legal protection of a corporation, read the 10 most common mistakes.

Protect Yourself

Your corporate protection will be in jeopardy when a creditor successfully sues the corporation and pierces the corporate veil due to the failure of keeping complete corporate records. Call 1-877-834-8211 and get compliant now.

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DISCLAIMER: Compass Group and its employees or agents are not in the business of providing tax or legal advice. If legal advice or other expert assistance is required, the services of a person in those professions should be sought. Compass Group, its employees and agents do not make any factual determination as to the validity of any business deduction for tax purposes. Compass Group does not expressly or impliedly endorse, accept, or validate any business record produced by Compass Group on behalf of Client. The Completed Documents produced by Compass Group through this written request are based solely upon the information provided by the client.