As a corporation or LLC, you are required to hold and document annual meetings. Your business attorney should have mentioned this to you at the time you formed the Company. The attorney may even send you an annual reminder or a disclaimer to sign each year.
In an audit, usually the second document an IRS auditor will ask for is your minute book.
If you are a corporation, the minutes must document the annual shareholder’s meeting to elect the Board of Directors. Separately, there should also be board minutes to document the election or appointment of corporate officers. The board minutes should include a number of other items such as:
- The amount of officer compensation;
- Declare dividends/distributions to the shareholders;
- Approve shareholder loan activity for the year;
- Acknowledge major transactions for the year such as large capital purchases or new/renewed loan or lease agreements; and
- Ratify all of the management decisions made during the year.
The last item is crucial for personal liability protection.
If the Company is a partnership or an LLC that elects to be taxed as a partnership, then the annual minutes of the partners/members should show the election of the managers as well as designation of the tax matters partner. Similar to a corporation, the minutes should document:
- Guaranteed payment amounts for each partner/member for the year;
- Approve any distributions or loans between the Company and a partner/member;
- Major transactions; and
- Ratify all decisions made by the managers of the partnership/LLC during the year.
We want to remind and encourage you to hold an annual meeting and to document with minutes. If your corporate attorney does this for you, provide the information listed above to be included in those minutes. Your company may never be audited, but if it is, the minute book could be critical to a positive outcome with the IRS.
Sample Minutes for Corporation:
MINUTES OF THE ANNUAL MEETING OF THE BOARD OF DIRECTORS OF
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The annual meeting of the Board of Directors of ………………….was held at the office of the corporation on……………..
____________acted as Chairman of the meeting and ______________ acted as Secretary of the meeting.
The Chairman announced that the election of the officers of the Corporation was in order. Upon motion duly made, seconded and unanimously carried, the following persons were elected as the officers of the Corporation.
- President
- Vice President
- Secretary
- Treasurer
Resolved, that the Board of Directors shall, and they hereby do, authorize, approve, confirm and ratify all acts or actions of every kind and nature taken by any officer or officers of this Corporation with respect to the financial affairs or other business of the Corporation pursuant to their general authority to act on behalf of the Corporation, whether or not recorded in the minutes of the Corporation, since the last annual meeting of the Board of Directors held on………….
Approval of officer’s salaries for 2015, officer’s bonus for 2014, and shareholder distributions for taxes on or before 4/15/15 at __________each, calculated at 39.6% maximum tax bracket.
There being no further business to come before the meeting and a motion that the meeting be adjourned having been made, seconded and unanimously adopted, the Chairman declared the meeting adjourned.
Dated this _____________
____________________________
___________________, President
Sample Minutes for LLC:
MINUTES OF THE ANNUAL MEETING OF THE MEMBERS OF
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The annual meeting of the Members ___________was held at the office of the LLC on ______________.
____________acted as Chairman of the meeting and _____________acted as Secretary of the meeting.
The Chairman announced that the election of the Board of Directors of the Corporation was in order. Upon motion duly made, seconded and unanimously carried, the following persons were elected as Directors of the Corporation:
There being no further business to come before the meeting and a motion that the meeting be adjourned having been made, seconded and unanimously adopted, the Chairman declared the meeting adjourned.
Dated this ______________
________________________________
_________________, President