If your small business was set up as a Minnesota corporation, then there are some standard requirements you need to comply with every year. These are the “corporate formalities” that make it clear your business is a separate entity. These formalities matter to the IRS and any interested judges looking to extend the liability for an accident into your personal assets. They include annual meetings, a board of directors, taking meeting minutes, and keeping the corporate books straight.
If you’re the owner of a small corporation, it falls to you to make sure all the details are handled. In some situations, you may hold your required meetings at your attorney’s office and they keep the official records for you. This is there way of protecting you and making sure the required details are met. Without these minutes and the books in place, you may forfeit your personal liability shield and tax benefits. When a lawsuit is brought against your company, a judge may look and see that the formalities are not met and assume that you’re not serious about being a corporation. This would allow them to remove the liability shield (called “piercing the corporate veil”) and reach into your personal assets when passing judgements.
There are a number of key corporate activities and records that should be kept neatly organized either in written or typed notes. You can also keep corporate records in electronic software such as accounting software. These records, at a minimum, should include:
- A list of shareholders and option holders for the corporation,
- Meeting minutes from annual meetings and shareholder meetings,
- Records of company stock issuance,
- Records of company officers,
- Company financials including major financial transactions, and
- Company employee contracts, tax forms, and payment records.
As part of recording the minutes during any corporate meeting, make sure the document includes the name of the company (especially if someone in the group owns more than one company), a list of those present and their roles or simply that they’re a shareholder (also note anyone who is joining electronically), the date, time, and location of the meeting. Meeting minutes do not need to include a transcript, they just need to cover the highlights of what was discussed and decided along with any other relevant information so that it is clear what the meeting covered.
Generally, you circulate the minutes to all members and have them approved, then file a copy of the minutes with your corporate record. Whether you keep your books at your attorney’s office or your own office, make sure to keep the paperwork together so you can locate it quickly in the event you need it.
Shareholder meetings and annual meetings are great times to sit down with all the decision-makers of your company to review the previous year’s efforts and make a strategy for the upcoming year. Having an attorney present at your meeting lets you address legal issues and concerns as well as get their input on your strategy. After all, an experienced corporate attorney has helped many companies handle many different situations and has a lot of experience.
If you’re looking for the right experienced business attorney for your business, reach out to Virtus Law Firm by calling 612.888.1000 or emailing firstname.lastname@example.org. We can help business meet their legal needs and get the best advice from set-up to succession plan and every step in between.