Happy New Year!As you make resolutions for 2009, may I suggest that you resolve to keep accurate corporate minutes for your business?Proof of the existence of a corporation can be found in its corporate minutes.Neglecting corporate formalities such as documenting shareholder and director meetings or other major corporate decisions can be viewed as ignoring your corporation’s separate legal existence.In doing so you run the risk of your corporate status being disregarded by a court should you face a legal challenge.This may expose you to personal liability for your corporate activities.
So what type of corporate decisions should be documented?While routine day to day business decisions do not require documentation, written minutes or corporate resolutions should be prepared for decisions that require formal shareholder or board of director approval.Here are some examples:
·Annual shareholder and board of director meetings
·Issuance of new stock
·Purchases of real property or leasing real property
·Decisions to expand into a new line of business
·Taking on a new loan or line of credit
·Changing the corporation’s tax status
·Electing/appointing new corporate officers or directors
·Offering/changing an employee benefit plan
·Significant purchasing decisions for services or equipment
The above list is by no means complete.However, by documenting key decisions, you will have written documentation should you be questioned by creditors, taxing authorities or your shareholders.
If you already have corporate minutes and they are up to date, you are to be commended.For those that do not have corporate minutes or if your minutes are not up to date, consider making this a priority for your business in 2009.May you have a prosperous New Year!
