The Corporate Minute Book – Have You Seen Yours Lately?
by Jeff Waddell
Many, if not most, small business owners fail to keep their corporate records up-to-date. The reasons this happens are entirely reasonable and predictable. Small business owners make their own decisions. They usually own the entire business so they do not need someone else to approve what they decide. On top of those reasons, small business owners generally feel as though they lack the time to tend to what might seem to be useless record keeping.
Unfortunately for the small business owner the times they get the unpleasant reminder that the record keeping was not really useless are when there are problems. For example, the IRS decides to audit, a family member passes away and it appears they still own stock in the company, a dispute arises about some decision that was made years ago and there is no written record of exactly what was decided. The sting of all these problems can be lessened with taking the time to cross the “t’s” and dot the “i’s.”Business record keeping in important, not just for accounting records, but also the major business decisions and annual decisions about who are the officers and directors, what bank loans were approved, property acquired, sold or otherwise. Maintenance of corporate records is also very beneficial for proper estate and corporate planning. To know how to plan for the future, your attorney or other advisor will need to know the current landscape of the business and a properly maintained corporate minute book is the right place to start.
If there is an agreement among shareholders about the stock and what happens to it when someone dies, those records need to be maintained in a safe, central location. Thus, the original purpose of the Corporate Minute Book. If your business is a limited liability company or a partnership the same general concepts can be applied to create an LLC Book or Partnership Book. That is just good business.
The maintenance of your corporate records is a relatively simple way to provide a history of your business that will one day be needed when the time comes to pass the company to the next generation, or to sell the company to a third party. Thus, in its own way, keeping the corporate minute book up-to-date is an important part of preparing for business succession and estate planning. Take those few extra minutes to do it right and save yourself and your heirs significant headaches in the future.Explore posts in the same categories: Estate Planning comment below, or link to this permanent URL from your own site.