2015 is coming to a close. If you run a business, there are a couple of things you should do, before the year ends. First, you should speak to your CPA and see if there are any end-of year tax planning you can do. This can help you minimize your tax liability and get you organized as you move into the New Year.  

The other important thing you will need to do (regardless the size of your organization) is to hold an annual meeting of the board of directors and shareholders. Every corporation must prepare annual minutes and include them in their corporate minute book. It may sound silly or unnecessary, but here are some reasons why it’s imperative:

• Even if you are the only director and shareholder of your company, and hold all the offices of your corporation, California law requires you to hold, at least annually, a board meeting and a shareholder meeting.    

• One of the main reasons business owners incorporate is to shield their personal assets from the debts and liabilities of their corporation. If you do not maintain corporate records, an adverse party could “pierce the corporate veil” of your corporation and reach your personal assets.

• Taxing agencies, like the IRS, may reject your corporate deductions in a tax audit, requiring you to pay penalties for failing to maintain your corporate records.

• Auditors from the franchise tax board, IRS, and EDD can ask to review your corporate minute books at any time and fine your corporation, if you don’t have the appropriate documentation.

• When your business is seeking financing or when you sell your business, the bank or the potential buyer will ask to review your corporate minute books when they conduct their due diligence.

• Your annual minutes keep track of important business proceedings from year to year, even if you forgot what transpired in which year. Such records come in handy during a potential audit, as well as when filing your tax returns, bringing in partners or selling your business.

No matter how tedious, it is important to have your corporate minute book kept up to date. Staying on top of this task may end up saving you substantial attorneys’ fees or preventing potential liability, fines and/or assessments down the road. If you need help on getting started, give us a call. We’d love to speak with you.818-956-9200

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616 E. Glenoaks Boulevard, Suite 203

Glendale, CA 91207

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15303 Ventura Boulevard, Suite 900

Sherman Oaks, CA 91403