Maintaining Corporate Records

By David Gass

The limited liability protection offered to corporate shareholders is by far the most important and distinctive advantage of incorporating a business. To continue enjoying the benefits of such an association, it is vital that you properly observe corporate formalities and properly maintain corporate records and accounts. This will help your corporation maintain its corporate status and protect its officers and shareholders from personal liabilities.

To Protect Your Corporate Status

You need to maintain current and proper corporate records so that creditors, which include IRS, are not able to challenge the validity of your corporate shield. You not only need to maintain corporate records of all meetings, but also store them in a safe place as it is critical to maintain your corporate shield.

By maintaining corporate records you make yourself to meet state reporting and filing requirements efficiently. In case you don’t happen to maintain corporate records and are unable to annually report and file records, your corporation might just get dissolved. You can keep your corporation in good standing by maintaining the necessary records. This helps you to pay all necessary federal, state, county, and business taxes, including franchise taxes.

Importance of Minutes Book

Corporate minute books serve as official corporate records. So, keeping them up-to-date should be high on the priority list. You have to ensure that the minute book is able to demonstrate share ownership of the corporation. This is of primary importance as the minute book is the official source of documents. You should maintain the minute book so that it exactly reflects when and to whom shares of stock have been transferred. It should also effectively contain the original stock certificates or share register of the owners.

Maintaining of minute book records allows one to understand the decision making processes of the corporation. You can also maintain records to show when decision makers ceased their functions. By maintaining corporate records in a minute book, you are able to leave a trail of the decisions and transactions of the corporation.

Maintaining corporate records in the minute book is important as an audit backup, as well. This will also help you to determine effective dates for tax purposes and help ascertain justification for the accrual of expenses and fixed obligations. Maintaining corporate records is beneficial as they help to grant corporate directors and officers the authority to act. Up-to-date records will help to avoid challenges to the corporation’s authority to take certain actions.

Maintaining corporate records in the minute book details the official standing of the corporation. This will help to establish the background record required to facilitate corporate transactions which include the issue of shares and sale of the actual corporation. Inaccurate maintenance of the minute book records will turn the simplest of corporate transactions into a costly experience for all involved. Maintaining corporate records in the minute book will also act as the official recording of the compensation and dividends that the corporation will be required to pay. In addition, a well maintained corporate minute book record is an effective means of creating a paper trail in order to demonstrate to CCRA and other government authorities the numerous payments the corporation has made.

For your convenience there is lot of softwares available online to help you to maintain proper records for your corporation. Moreover, these softwares are economical and would not be a heavy strain on your budget.

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