Does your business have a corporate book? Does it have updated information? Do you have at least an annual meeting?
What should be in your corporate books and records? It should include the following:
• Article of Incorporation
• Bylaws
• Minutes of first Director’s meeting
• Stock Certificates
• Minutes from annual and special meetings
I am meeting with businesses for their year end tax planning and we are having their corporate annual meeting. This is in an effort to assist our clients in completing all of their requirements.
Failure to Maintain Proper Corporate Records – items that assist in piercing the corporate veil
• Absence or inaccuracy of corporate records;
• Concealment or misrepresentation of members;
• Failure to maintain arm’s length relationships with related entities;
• Failure to observe corporate formalities in terms of behavior and documentation;
• Failure to pay dividends
• Intermingling of assets of the corporation and of the shareholder;
• Manipulation of assets or liabilities to concentrate the assets or liabilities;
• Non-functioning corporate officers and/or directors;
• Significant undercapitalization of the business entity (capitalization requirements vary based on industry, location, and specific company circumstances);
• Siphoning of corporate funds by the dominant shareholder(s);
• Treatment by an individual of the assets of corporation as his/her own;
• Was the corporation being used as a “façade” for dominant shareholder(s) personal dealings; alter ego theory