Holding corporate meetings, writing digital corporate minute book and recording corporate solutions is perhaps the most ignored responsibility by little company proprietors and providers. As a company home, official, or investor it is your responsibility to see to it that precise and complete electronic minute book are kept. In most declares, it is also the law.
Why? Because minutes are important “corporate governance”, part of the characteristics and essential function of a company or other “artificial” business. Carelessness will be your corporate disaster when the “big one” comes: court action, divorce, personal bankruptcy, verdict, loan, or God prohibit, a revenuer’s observe of evaluation.
You established your company LLC to enjoy the benefits:
- Resource protection;
- Individual lawful existence;
- Restricted individual liability;
- Personal and financial privacy;
- Bullet-proofing your affairs
- Income tax advantages;
- Compartmentalization of your resources and liabilities; and
When you are not able to keep current your digital corporate minute book, you put all those benefits at risk for loss.
Piercing the Company Veil
Your carefully organized little company, LLC, limited collaboration (LP) or other business company will definitely adhere to corporate requirements just as the big companies and corporations. Legal courts – and the IRS – are magnificent on this subject: If you are not able to cure your company as another lawful enterprise, they will too. They will set it aside, impute individual responsibility to you, and stop tax reductions. They use conditions like “alter ego”, “nominee”, “self-dealing”, and “failure to see corporate formalities” to do just that.
Litigators know this. They also believe you ignore the facts of excellent corporate government, like having meetings, implementing solutions and recording these activities in corporate minutes. They know most people are unaware, anxious, or just too active to usually the requirements. It is the simplest thing for them to confirm, so that is exactly what they concentrate on when they release their strike on you and your company. Among the first salvos released by advice for the complainant, or the Income Agent: A subpoena duces tecum, for duplicates of your official electronic minute book. That’s the way it works. You had better have them in excellent condition.
When you registered your company with the condition, the condition designed it with separate lawful lifestyle, a character of its own, and limited responsibility. However, after that, your activities can endanger that separate lawful position.
You may be the corporate only official, only home, and only stockholder. Still, you must observe corporate formalities; hold meetings; officially adhere to resolutions; accept an action, significant selling or purchase; call for elections and elect. This helps set up that you use your company at an arm’s duration and regard its separate lawful lifestyle. These important functions can help convince courts, tax corporate and other regulators to give it separate lawful identification.
When your corporate veil is pierced, you lose your corporate protect. Once you and your company are combined, you lose tax benefits and become individually responsible for everything: financial obligations, decision, liens; and additional taxation with the charges, charges and interest they bring. The best proof of excellent corporate government is found in your company’s moment book.