To enjoy the benefits of incorporation, the company must observe corporate formalities and properly maintain corporate records and accounts. This often takes the form of corporate resolutions or corporate minutes.
Documenting corporate resolutions helps the corporation to retain its corporate status and protects its officers and shareholders or members from personal liabilities. This documentation will protect your corporation, so that the creditors, which include the IRS, are not able to challenge the validity of the corporate shield. Corporate documentation is found in many forms and are the key to having a strong shield protecting your assets.
One documentation tool are Written Consents, which are used to show approval of special items of business. For example: lease of new car, or attending a training related to your business. Your resolutions need to provide the: When, What, maybe even the Why of the business decision.
Some directors or members think that it rather crazy to hold a real meeting with you and yourself. But it is perfectly Ok, Written Consents may be with or without a formal meeting. You just need to document the decision!
Making use of these forms shows demonstrates you take care of the life of your business – your corporation – whether it is in an IRS audit or to a lender when applying for a business loan.
After the consent forms are completed, signed and dated it is important that they be stored in a safe place, your Corporate Record Book.