Corporate Records What to Keep
Below is a MRR and PLR article in category Reference Education -> subcategory Legal.
Corporate Records: Essential Documents to Maintain
Summary:
Whether you've formed a corporation or a limited liability company (LLC), maintaining thorough records is crucial. Here’s a guide on the essential corporate records you need to keep.Key Points:
- Corporate records- Corporation
- Limited liability company
- Minutes
- Articles of incorporation
Article:
Forming a corporation or an LLC creates an entity separate from you, necessitating distinct actions and records. For example, a corporation requires its own bank account for revenues and debt payments. Shareholders, even in a single-shareholder entity, must avoid personal expenses from this account. This principle extends to meticulous record keeping.
For simplicity, we'll refer to both corporation and LLC documents as corporate records. Although these entities use different names for their documents, the purpose remains similar. For instance, "Articles of Incorporation" for a corporation aligns with "Articles of Organization" for an LLC. The following records are essential for both:
Essential Corporate Records:
1. Articles of Incorporation
- The charter that establishes the entity with the relevant Secretary of State.
2. Bylaws
- These define the corporation's rules, covering administration, shareholder rights, meeting procedures, and more.
3. Board Resolutions
- Resolutions passed by the Board of Directors, such as defining stock classes and approving business actions.
4. Minutes of Shareholder Meetings
5. Annual Meeting
- Required by every state, at least one board meeting must be held annually. Keep these minutes in your corporate book.
6. Shareholder Communications
- Keep all communications to shareholders, preferably permanently, to protect against potential lawsuits.
7. Shareholders List
- Maintain a record of shareholders and the shares they own.
8. Annual Report
- Most states require an annual or bi-annual report filed with the Secretary of State. Store copies of these in your records.
9. Balance Sheets
- Shareholders can inspect the corporation's finances, so keeping updated balance sheets is essential.
10. Tax Returns
How Long to Keep Records:
Some legal advisors suggest retaining records for three to five years. However, it's wise to keep them permanently. In case of shareholder disputes or if you decide to sell the business, comprehensive records are invaluable. Keeping all records ensures you're well-prepared for any situation.
In conclusion, meticulous record-keeping is not just a legal obligation but a strategic advantage for the health and growth of your corporation or LLC.
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