The Importance of Corporate & LLC Meeting Minutes
Why keep records of meetings between me (the individual) and myself (the company) when I have a SMALL company?
Let us ask why did you form the company? Maybe because you wanted some protection from lawsuits and other unfortunate distractions. These would be good reasons but it only works if you are truly operating the business as its own entity.
If you formed an “S” corporation then you should have received a corporate minutes book along with the corporate seal. Many put the book on the shelf never to open it again. WRONG!!!! From the date of inception you should have minutes of board meetings, authority given to management to borrow money, purchase equipment, etc. Remember YOU are separate from the COMPANY. Failing to keep the minute book up to date implies you are operating as a sole proprietor. This could strip you of many, if not all of the protections afforded by the corporation.
Now from a practical standpoint, by keeping track of decisions made, goals set, and more, you have an on-going record of what you have accomplished and what you wish to accomplish in the future. It affords structure to your small business.
The LLC operates a little differently, there is no corporate minute book but there is an operating agreement…..well there should be an operating agreement. Hopefully when you started your LLC you opted to purchase one. Yes, the online legal services offer canned operating agreements as do attorneys but you need to be careful to make sure they fit your situation and are legally acceptable in your state.
Why do you need an operating agreement if you are a single member LLC? Simple, you need to show YOU are separate from the COMPANY and operate the COMPANY affairs apart from your own. As with the “S” corporation you most likely chose the LLC to afford you some protections but if you don’t operate the company as its own entity you could lose the separateness if you are sued.
It is also important for you to maintain records of meetings, decisions to purchase or borrow money, etc. Having an organized method to maintain such information can only work in your favor as your business grows.
I have not seen it happen often, but banks have requested to see the corporate book or operating agreement when lending larger sums.
