Should I Keep A Corporate Record Book?

Any corporation or company formed with the Secretary of State should keep a corporate record book. While there are no federal laws requiring a corporate record book, the IRS may inquire about one in the event of a company audit. Illinois, Florida, Washington, Oregon, California, and Delaware either specifically require or strongly encourage an up-to-date corporate record book. Even if your state does not have a corporate record book requirement, failing to do could open yourself and other officers up to liability by piercing the corporate veil. Finally, in the event of a merger, acquisition, or your company seeks to obtain funding, a corporate record book could help expedite the process. It is also quite possible that the lack of a corporate record book could derail your endeavor.

Corporate record books typically come with a company stamp, blank stock certificates, a transfer ledger, and tabs to organize your documents within your corporate record book. A simple binder could serve its purpose as a corporate record book. The book should contain the document filed with your respective Secretary of State in order to begin your company, typically referred to as “Articles of Incorporation” or something similar. The corporate record book should also contain your company’s governing text such as the “by-laws” or an “operating agreement”. Most importantly, your book should contain the annual and special meeting minutes of your officers. Your corporate record book could also contain any miscellaneous documents dealing with your company such as annual reports, shareholder agreements, etc.

Failure to maintain a corporate record book could leave the directors open to personal liability in an event known as “piercing the corporate veil”. However, a well-kept corporate record book could prevent a court from ruling that the directors are personally liable. Furthermore, a well-kept corporate record book could convince a financial institution or possible buyer to do business with your company. If you’re unsure on how to construct a corporate record book, the professionals at The Center for Financial Legal and Tax Planning are more than equipped to answer any questions with regards to business record-keeping and would be happy to help.