Have you thought about your corporate records lately? If you answered “no”, then you are not alone. Many corporations spend their energy and resources elsewhere, like on operating the business. However, danger is lurking for those corporations that do not take the time to prepare the required corporate records. At a minimum, your corporation should maintain annual shareholder and annual director minutes.
It is also a good idea to have minutes that capture other significant events that occur during the course of a year, e.g. capital expenditures, major purchases, charitable contributions, contributions to retirement plans and other corporate activities. Here is the reason. In order to enjoy the benefits and protections of acting in the corporate form, the corporation has to act separately and apart from its individual owners. Without meeting the minimum record keeping requirements, and without the ability to establish the corporation’s separate existence through a well-maintained corporate record book, third-parties such a government agencies and aggrieved parties may attempt to “pierce the corporate veil” and look to the individual owners to satisfy any claims or obligations.
The concept of piercing the corporate veil is one well-recognized in the law, but one that is difficult to accomplish if the proper corporate records are in place. If you have taken the steps to form a corporation, you need to take the further steps of protecting it along with yourself and your personal assets. The last thing that you or your family wants to see happen is that personal assets come under attack for a failure of keeping proper corporate records – which is easy to do, does not take much time and can be done on an annual basis. Look at it this way. It is easier (and less expensive) to build a fence at the top of a hill than calling the ambulance at the bottom of it. If you want to build the fence or strengthen the one you may already have, we can help.