Corporate Minutes

Ten Forty + Quality Tax Preparation & Financial Services 281-397-7777 Fax 281-397-7443 Tax Tips Keep good corporate minutes An employee who is required to communicate with board members, take notes at board meetings, and compile corporate minutes may cringe at such a tedious and often thankless assignment. But carefully prepared corporate minutes are valuable, even essential, in many circumstances. They can be used to convince state regulators that directors performed their fiduciary responsibilities with due care. During an audit, favorable tax treatment — including the deductibility of officer compensation and travel-related expenses — may hinge on unequivocal documentation in the board minutes. If a company's corporate status is called into question, shareholders may become personally liable. Accurate board minutes can be used to demonstrate that the corporation has maintained its legal status and acted in the best interest of its shareholders. And by documenting the basis for board decisions, meeting minutes may provide insight to managers who must implement corporate policies and procedures. When should meeting minutes be kept? Of course, every routine discussion doesn't need to be documented. But at a minimum, a record should be made when the board selects new corporate officers, implements significant new policies, establishes new retirement plans, borrows significant amounts, or sells major assets. In fact, minutes should be taken at any official meeting in which significant discussions are held and corporate decisions made. What information should be included? Without necessarily identifying the individuals who spoke, the minutes should document the scope of the discussion. The goal should be to summarize the major points that support the final decision or resolution. The minutes might also indicate, in general terms, the time spent reaching a decision. This type of language — "the board then discussed the matter at length" — may serve to show that agenda items were not passed over lightly. Should the company's position ever be questioned in court, such verbiage may provide support for the board's decisions. In addition, the minutes should record any documents considered (though such documents may be incorporated by reference only). If board members relied on the advice of attorneys, accountants, or other professionals, this information should be included as well. What should be left out? In general, it's a good idea to omit a record of the detailed discussions that led to final decisions. Such "he said/she said" transcripts may later provide fuel to those who want to question the firm's actions. In a court of law, the minutes speak for the corporation. Discuss your minute taking process with your attorney. As always please call us if you have any questions. 1040 + Quality Tax Preparation & Financial Services Joseph C Becker Ten Forty plus Quality Tax Preparation & Financial Services www.tenfortyplus.com 281-397-7777, Fax 281-397-7443 joeb@tenfortyplus.com Contact Us There are many events that occur during the year that can affect your tax situation. Preparation of your tax return involves summarizing transactions and events that occurred during the prior year. In most situations, treatment is firmly established at the time the transaction occurs. However, negative tax effects can be avoided by proper planning. Please contact us in advance if you have questions about the tax effects of a transaction or event, including the following: • Pension or IRA distributions. • Retirement. • Significant change in income or • Notice from IRS or other deductions. Revenue department. • Job change. • Divorce or separation. • Marriage. • Self-employment. • Attainment of age 59½ or 70½. • Charitable contributions • Sale or purchase of a business property in excess of $5,000. • Sale or purchase of a residence or other real estate.