Why Does My Corporation Need a Corporate Book?
Cross your T’s and Dot your I’s
If you are a business owner, you have to keep an eye on many aspects of the company. Making sure you remain profitable with a good debt to asset ratio is your number one priority and allows you to continue the venture and pay your loyal employees. However, if your business fails to keep adequate records, you might soon find yourself in hot water. To this end, you will want to keep a corporate book and accurate financial records, especially if your business is structured as a corporation.
Don’t Judge a Book by Its Cover
A corporate book holds all of the essential permanent records for your business. Whether you’re an S Corporation, C Corporation or a Nonprofit Corporation, you are most likely required to maintain corporate meeting minutes’ and other records. Many states require corporations keep an accurate up to date corporate book to comply with the law. This book is typically created by the board of directors or officers of your company. They also generate many of the corporate documents inside. A specific member is designated to keep these corporate records, oftentimes the secretary, who is responsible for taking the minutes and recording any motions raised during meetings. The minutes and motions of the organizational meeting and annual board of directors and shareholder’s meeting(s) will be found within the corporate book. You can also find the corporate bylaws ratified by the corporation in here.
What’s in a Book?
The corporate book contains a plethora of information on the business and should always be accessible and well-organized in case it needs to be reviewed internally or by a requesting agency. The book generally contains:
- Articles of Incorporation, which were filed with the state where the entity formed and represents proof that it is a legitimate enterprise.
- Corporate Seal, which is typically affixed to corporate resolutions and minutes’ records by the secretary or treasurer.
- Corporate Bylaws (or in the case of a limited liability company, an Operating Agreement), which are the rules and procedures that govern the entity.
- Licenses or permits required to transact the business.
- Federal Employer Identification Number (FEIN) letter and any tax election forms/letters applied for.
- Annual and Special Meeting Minutes’ Records along with any corporate resolutions ratified.
- Annual financial records, such as profit and loss statements or an end of year trial balance.
- Stock Transfer Ledger and record of Shareholdership or Membership.
- Benefit plans, such as health reimbursement arrangements or educational assistance plans.
- Other miscellaneous information such as Fictitious Name filing records, Buy-Sell Agreements, or other official corporate documents and agreements.
A Good Read
We have established what a corporate book is, but is it vital? The answer is an emphatic YES! If you are a corporation, you need one. It is a requirement in many states. If you are a limited liability company with an S or C status tax election, keeping a book is highly recommended to evidence you are in compliance with state and IRS laws. Failing to maintain a corporate book could result in fines or other penalties. Remember to consult your state’s guidelines in this area. Even if your state doesn’t require it, it is necessary to keep your documents in order and one easily referenced place. A corporate book is the heart of your business; always keep one.
by Nick Climan – Content Creator at Half Full Marketing
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