The Importance of Keeping Meeting Minutes for Your LLC or Corporation
Forming an LLC or Corporation is a typical strategy to protect your personal assets from claims of creditors for a business. One of of the requirements for maintaining the LLC or corporation legal existence (and the liability protection that it affords) is that the members/shareholders and the Board of Managers/Members/Directors must meet at least annually. Although most people view meeting minutes as a necessary evil, it doesn't have to be a waste of time. For example, in addition to being a first step in making sure the entity is respected as a separate legal entity, an annual meeting can be used as an important tool to support your company’s tax positions.
Besides the election of officers and directors, other actions that should be considered at the annual meeting include the directors approving the accrual of any bonuses and retirement plan contributions, and ratifying key actions taken by managers and officers during the year. The directors should also specifically approve any loans to shareholders to lessen the opportunity for the IRS to reclassify the loans as taxable dividends. For LLCs taxed as partnerships, there are a number of elections that should be considered when dealing with expenses paid individually by partners.
These are just a few examples of well planning annual meeting minutes can be an important part of your business tax records. We would be happy to be involved in your company’s annual meeting and to assist in making sure tax-effective minutes of the meeting are prepared. When scheduled shortly before the corporation’s year-end, many companies consider the annual meeting as an opportune time for their accountant and attorney to plan together for the wrap up of the year.