Corporate Records - What to Keep
by: Richard Chapo
Whether you’ve created a corporation or limited liability
company, you must maintain records. Here’s a primer on the
basic corporate records you need to maintain.
Corporate Records
When forming a corporation or limited liability company, you are
creating an entity independent from yourself. In so doing, this
independent entity must take actions for itself, not you. For instance,
a corporation will have a corporate bank account through which
all revenues and debt payments are handled. As a shareholder, even
with a single shareholder entity, you will not pay person expenses
out of the corporate bank account. This concept extends to record
keeping.
For the purpose of this article, I am considering both corporation
and limited liability company documents as “corporate records.” Although
the records of each entity have different names, they serve the
same purpose. For instance, articles of incorporation for a corporation
serve the same purpose as Articles of Organization. The following
list applies to corporations, but you can apply the list to the
limited liability equivalents.
Although each state has different records requirements, all require
you to keep the following records.
1. Articles of Incorporation – The charter establishing
the existence of the entity with the relevant Secretary of State.
2. Bylaws – The rules of the corporation. Essentially, the
bylaws set out how the corporation will be administered from a
procedural perspective, the rights of shareholders, how meetings
will be called and so on.
3. Board Resolutions – These are resolutions passed by the
Board of Directors from time to time, such as defining classes
of corporate stock and approving particular courses of action for
the business.
4. Minutes of Shareholder Meetings
5. Annual Meeting – Every state requires a corporation to
have at least one meeting of the board of directors each year.
Keep these in your corporate book.
6. Shareholder Communications – Copies of all communications
to shareholders. Most states require you to hold these for three
years, but you should keep these permanently to guard against future
shareholder lawsuits.
7. Shareholders – A list of shareholders and the shares
they own.
8. Annual Report – Most states require you to file an annual
or bi-annual report with the Secretary of State. Keep copies of
these in your corporate records. Most states provide a pre-printed
form.
9. Balance Sheets – Shareholders have the right to inspect
the finances of the corporation, although this right has limitations.
You need to keep up to date balance sheets.
10. Tax Returns
So, how long should you keep these corporate records? Some attorneys
will tell you three or five years. Personally, I believe you should
keep them permanently. If a shareholder dispute occurs, you don’t
want to testify you through away a document. If the business is
eventually sold, the buyer is going to want to see all corporate
records. Either way, you are better off holding on to all records. |
