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Corporate Minutes and Why You Need Them

Posted by Traci A. Malik Posted on July 11 2017

Corporate minutes are meeting notes from the board of directors for a corporation or business. It is an official account of what was talked about at formal meetings including decisions made and actions taken. The shareholders or owners of a corporation should have at least an annual official meeting. It is mainly for key decisions or company activities not for everyday decisions. For example, issuance of new stock, officer announcements, key employee hires and salary changes. You should include the full legal name of your company, the name of the person conducting the meeting, the location and date of the meeting, list of the attendees and list of those that are absent. You would need to record motions and votes. Record when the meeting started and when it was adjourned. Then at the next meeting, have the prior minutes reviewed and approved by the board. You should keep your minutes in a permanent file.

So why should you have a meeting and keep minutes? Just in case the IRS or State audit you and request the minutes. If you don't have minutes and have other issues and you are a S corporation, the IRS could revoke your S status and treat your business as a sole proprietor or partnership instead. They will determine that you are not truly acting as a corporation and therefore will be subject to the self-employment taxes on all net income. The most serious consequence is the loss of liability protection for the shareholders' personal assets regarding the debts of the corporation, usually referred to as "piercing the corporate veil." When a corporation's shareholders are sued personally for the corporation's debts under this legal theory, the court will examine a number of factors, one of which is whether the corporation kept a proper set of books and records, including minutes of meetings.