The formal record-keeping requirements for corporations are one of the biggest differences between corporations and limited liability companies.Depending on where your company was incorporated, the specifics may be different.Regardless of whether the records are mandated by a particular state's law, they should be kept in accordance with the best business practices.
Step 1: Take a look at your state's law.
Corporations in each state have their own regulations on how long they must keep records.Corporate record-keeping requirements can be found on the Secretary of State's website.Most states require that the records be open to inspection by corporate directors or state officials at any time.Other states where you will operate in the future might not require certain records.Some records may not be required by the state, but may be needed by banks or licensing authorities.If you hired an attorney to help organize your corporation, ask him or her for a detailed breakdown of the documents you must keep in your corporate records.
Step 2: You should organize your documents with any amendments.
You have to keep a copy of your organizational documents at your principal place of business and with your corporation's registered agent.Your documents are considered to be your corporation's constitution.These must be filed with the Secretary of State in the state where the company was incorporated.If your company is incorporated in a state other than the one in which it does business, you should keep copies of these documents with the registered agent in each state.If your company was incorporated in Massachusetts but also does business in Connecticut and New Hampshire, you would need to keep copies of the documents in your main office there.You should include copies of any annual reports that are required by your state of incorporation or any other state in which you operate.
Step 3: There is a list of current and former directors and officers.
Each year the list should be updated to account for any changes.Full legal names of each director and officer should be included in your list.
Step 4: Copies of all communications with shareholders should be kept.
All official communication between the company and shareholders should be included in your corporate records.Notices to shareholders are required for many corporate transactions, including large sales of stock.Proof of compliance with notice requirements can be found in these copies.All communications should be kept for at least three years if the issue described in the document is still relevant to the company.
Step 5: All shareholders' records should be included with a stock transfer ledger.
You should keep accurate and up-to-date records of the company's ownership.Each shareholder's name should be included in your list of shareholders.Keep a copy of the shareholder's agreement with your other ownership documents.You should include any resolutions made by the board over the past three years that fix rights, preferences, or limitations of one or more classes of stock shares.
Step 6: Keep records of transactions and financial reports.
An orderly file of the corporation's finances makes it easier to make financial statements.The records should be kept for at least three years.Accounts payable and accounts receivable ledgers should be kept for at least seven years.Balance sheets, general ledgers, cash disbursements and receipts are some of the records that must be kept indefinitely.If you have any questions about how long a record should be kept, keep it.If financial records should be retained, you might want to consult an attorney or a CPA.
Step 7: All federal, state, and local tax returns must be retained.
Unless your state law requires a longer period of time, you should keep your corporate tax returns on file for at least three years.The time during which you can amend a tax return or the IRS can assess additional taxes should be the time when you keep tax returns and related documents.The period is three years for most documents.You should keep employment tax records for at least four years from the day you paid the tax.If the item is still depreciation, the records should be kept.Records relating to the purchase of assets should be kept for seven years if the corporation is claiming depreciation.
Step 8: Key company activities should be recorded.
The organization or operation of the company should be included in the decision made by the board.Your company can only act through its board of directors once you are incorporated.You will need to provide evidence of board approval for certain actions such as opening a new line of credit or selling stock to investors.Corporate minutes are an important part of due diligence when another company is interested in taking you over.The shareholder approval should be noted in your corporate minutes.The minutes of board meetings and board decisions should be kept for at least three years from the date of the meeting.
Step 9: Each entry should include relevant details.
You should be able to quickly determine who took the action and when.The secretary should be at every board meeting.He or she will have to take written notes of all decisions made at the meeting.If you want to avoid creating minutes for several meetings at once, get in the habit of creating them immediately after a board meeting.This makes sure important details aren't left out.
Step 10: A standard format is used for all entries.
This makes it easy to organize and read each entry.Basic templates can be used for corporate minutes.You can purchase a software service to manage and format your minutes.If you want to reference your list of officers and directors, put a file- stamped copy of the business's certificate of incorporation in the front of your corporate minute book.