S Corp Meeting Minutes: Everything You Need to Know
S corp meeting minutes are one of the requirements that come with structuring your business as an S corp and it's a responsibility that must be taken seriously.3 min read
S corp meeting minutes are one of the requirements that come with structuring your business as an S corp. While the meeting minutes may seem like a small requirement, they are actually a very large responsibility that should be taken seriously.
Corporations and Requirements
While structuring a business as a corporation and then electing to be viewed as an S corp for tax purposes has many benefits and this also comes with requirements.
- Board of directors
- Officers elected by the board of directors
- Meeting minutes
Most state laws set out these requirements. For example, there are no federal laws requiring the keeping of meeting minutes. However, the IRS will ask for them if the company is being audited.
There are no requirements to file meeting minutes but the state copies should be kept with the corporate records. These detailed records of corporate action can be helpful in the future. Lawsuits or other legal issues may be truncated by these records.
The minutes should either be handwritten or printed. The same format should be used for all meeting minutes so that when looking for an item, someone can look in the correct spot to find the detail.
The format for the meeting minutes can include:
- Time the meeting took place
- Date the meeting occurred
- Location of the meeting
- Who was present at the meeting
- Who was absent from the meeting
- Issues and matters discussed at the meeting or tabled for future discussion
- Votes taken and results or actions
Note that all shareholders, officers and directors are legally entitled to ask for copies of the meeting minutes. These requests are important and should be taken seriously. Legal action can be taken if the meeting minutes are not provided after a valid request.
Corporate Action without a Meeting
Meetings are not required in all states for a corporation to take action. However, in these states, the written consent must be obtained by a predetermined number of shareholders in order for the action to be taken. These consents by the shareholders should be kept with the rest of the meeting minutes because they are, in fact, meeting minutes. This formula for written consent can be very convenient for the corporation. This is especially true for corporations with a small number of shareholders where formal meetings can become an unnecessary burden.
Consequences When Meeting Minutes are Not Kept
If a corporation fails to keep meeting minutes, the consequences may be dire.
Obviously, the most severe penalty for a corporation is the loss of the liability protection it provides its shareholders. This means that the shareholder’s personal assets may be used to satisfy debts and legal liabilities. This piercing of the corporate veil can occur when a corporation fails to keep a proper set of records, books and minutes.
How to Keep Meeting Minutes
As described above, meeting minutes are important for an S corporation. There are some simple steps to take to ensure that your S corp satisfies this requirement.
- Review the agenda prior to the meeting
- Record the facts about the meeting, like was it a regular or special meeting, who is present, who is missing, the name of the corporation, time, date, location and who is keeping the minutes
- Outline the agenda and write anything of note
- Actions taken must be recorded
- Motions made should be recorded and the result of each motion
- Notices provided at the meeting
- Points of order as a parliamentary issue should be recorded
- The minutes should include reports provided at the meeting
- The time of adjournment should be recorded.
- The minutes should be reviewed and approved
- The approved minutes should be placed in the corporation’s files for minutes
Many people do not understand the important legal requirement of meeting minutes for an S corporation. Hopefully, our article made you aware of just how important this requirement is for any S corporation.
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