Yes, you should!
Corporations are required to observe certain formalities, including holding regular directors’ meetings and keeping minutes, in order to ensure the business is operated as a separate entity. Minutes are important documents for protecting the owners’ limited liability status and keeping track of the votes and decisions made by your business.
Failure to keep meeting minutes may result in the loss of liability protection. If this happens, the shareholders’ personal assets may be exposed to liability for the corporation’s debts.
Limited liability companies are not required to hold regular meetings or to keep minutes. Still, it is a good idea to document important decisions. Keep in mind, when you decide to sell your business, the more transparent your business is, the higher level of trust a potential buyer will have in you and the better price you will get for your business.
Meeting minutes need to be in writing and should contain the following information:
- Date and place of the meeting
- Who was present and who was absent from the meeting
- Details about the matters discussed at the meeting
- Results of any votes taken
The minutes are a record of the decisions made at a meeting, the actions taken and the outcome of votes. It is also important to record who was present at the meeting. If a vote is taken during a meeting, the minutes will be able to show that a quorum (the minimum number of people required in order to have a vote) was met. Minutes should be kept with the corporate records.
It is not necessary to record every meeting, but rather those meetings that involve key decisions or key company activities, including:
- Annual director/manager and shareholder/member meetings
- Employee hires, personnel changes, compensation increases and bonuses
- Financial activities: business financials, new company bank accounts, loans, company credit cards, etc.
- New officer announcements
- Issuance of new stock or ownership interests
- Establishing 401K plans, SEP Plans or other retirement plans
- Insurance policies, key man insurance policies
In many cases, corporations and LLCs may take action on matters without having to hold a meeting provided the entity obtains the written consent of the minimum number of shareholders, directors, members or managers as required to approve the action as if a meeting had taken place. These written consents are treated as minutes and need to be kept with the corporate minutes. Small businesses frequently use written consents to approve matters rather than holding formal meetings.
All business owners are entitled to request a copy of the meeting minutes taken at any meeting.
Business legal issues are complex. Business owners should consult with their legal and tax advisers on such matters. For more information on business legal matters, please contact Kathy Tremmel at Tremmel Law, PLLC at (512) 539-0317 or email@example.com.