It is important that all business participants know how to keep corporate minutes. In most small business corporations the shareholders, directors, and officers are the same persons, and more often than not there is no day-to-day differentiation between what they do in their different capacities. In many such corporations formal meetings are not held, bylaw requirements are ignored (if, indeed, they even exist), and only fragmentary records are kept. While such practices may have no adverse affect on the corporation or its participants early in the life of the corporation, in the long run they can lead only to problems, even for a one-person corporation.
Disregarding the distinctions between shareholders and directors or officers may result in the participants being personally liable for corporate debts. Without adequate records, it may be difficult for the corporation to obtain financing in its own name, and an Internal Revenue Service audit could result in disaster. Should disputes later arise, either between the individual corporate participants or between the corporation and others, the lack of formal records and a failure to follow the required corporate rituals may again result in needless confusion and expense. If the business participants wish to form a corporation, it is important that they observe, on paper at least, the traditional corporate distinctions between shareholders, directors, and officers, and that they maintain records sufficient to sustain the corporation’s account on matters of importance.
In most states a corporation is required by law to keep as permanent records minutes of all shareholder and board of director meetings, including committee meetings, a record of all shareholder and board of director action taken without a meeting, a record of its shareholders, and appropriate accounting records. In addition, in many states a corporation is required to keep at its principal office copies of its articles of incorporation (including all amendments), bylaws (including all amendments), all board of director resolutions creating classes or series of stock, all written communications to shareholders made within the last three years, a list of the names and addresses of its directors and officers, and the most recent annual report filed with the state filing official. The corporate records are required to be kept in a written form or in a form capable of conversion into written form within a reasonable time. In addition, a corporation that files a federal tax or informational return is required by the tax laws to maintain permanent books and records establishing the income, deductions, credits, and other matters reported in a federal tax return. See Treasury Reg. 1.6001-1(a).