You have paid the filing fees, obtained an operating agreement or bylaws, documented the initial meetings and are the proud owner of a corporation, an LLC, or possibly both. Now that the entities are formed the first obvious step is to conduct business and start generating income. However, there are other activities outside the actual business activity that are essential to the well being of your newly established entity.
One important activity that small business owners often overlook is documenting decisions with meeting minutes. It is essential that as business owners you have at least annual meetings, which you document with official minutes. Also, it is recommended that any special decisions outside normal operations that may effect the entity’s tax situation be documented with minutes.
Without these minutes you may be risking your financial well being. Often courts will look at the meeting minutes when deciding whether or not to pierce the corporate veil. It is also possible the IRS may look at your minutes to establish the fact that you are treating your entity as a legitimate business and not as a way to deduct non-deductible personal expenses. In either scenario without the proper documentation you could find yourself on the road to financial ruin.
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