Establishing a Principle Executive Office Resolution - By David Gass

Holding corporate meetings and keeping up with resolutions is fundamental to why you formed a corporation. Appropriate and timely corporate resolutions help protect the personal assets of owners and officers.

Writing corporate resolutions should be simple and contain language adequate enough to show that the board of directors exercised its legal duty of care and loyalty. Resolutions should reflect meetings or written consents soon after the agreed upon actions happen.

You can lose tax deductions and benefits if you do not carry out meetings that adopt resolutions supporting the actions taken by the corporation, such as opening your corporate office.

For example, a primary resolution a company should adopt at the start of any business is a resolution to "Establish a Principle Office". A corporation must have a principal office and may have as many other locations as it needs; both within and without the state of incorporation.

Additional branch offices can be added as well. If opening an office in a different state of jurisdiction for the first time, an application to do business within that state is automatically created using the form required or recommended by that state.

When closing a last office in another state, a Certificate of Withdrawal is automatically created. Each office must have the name of at least one person to contact with notations as to whether such person is to be copied on corporate documentation and on your bills.

Your corporation's separate existence is only substantiated by "key" documents which include your company's Articles of Incorporation, Corporate Meeting Minutes, and Corporate Resolutions.

Failure to maintain this documentation, known as corporate formalities; you could make yourself personally liable for any actions taken by the company. It could also mean the loss of tax benefits and the protection provided by your corporate shield.

Statistics show that 80% of the corporations in America do not maintain their corporate records. The IRS scrutinizes corporate minute books during an audit looking for discrepancies between the actions of the corporation and the resolutions adopted by the Shareholders and Board of Directors.

As a general rule all records, resolutions and recorded minutes of your corporation should be kept for a period of no less than six years. Our software Corporate Manager is a complete all-in-one set of tools to help you keep your corporate records up to date, all in one place, and in complete compliance. Please visit our website for a free test drive!