Corporations already know they need to prepare meeting minutes and have them available to auditors, but did you know limited liability companies (LLCs) should also have meeting minutes?
What exactly are meeting minutes; what are they comprised of and when should they be taken? And who should be at the meeting and what if you don’t have a Board of Directors? These questions will be answered below. Note, I am writing in language using terms associated with corporations, but please recognize this can all be interchangeable with “company” for LLCs.
Let’s talk about why your corporate veil could be pierced in a court of law if the meetings are not recorded and maintained.
Why is this important? This is one of the items that will keep your corporation in good standing. The corporate veil protects your family and personal assets, which is one of the reasons you incorporate your business in the first place, therefore you want to protect it.
Can one-person own an S or C corporation? YES. The owner is just listed as the person filling all the seats of the board of directors and owns 100% of the shares. The board should be made up of people you trust to help you grow your business, but this doesn’t mean they agree with everything you have to say or want to do. Business decisions should not be made by yourself, you should talk it over with a couple of people to draw on their knowledge, experience, and expertise in various matters.
When should you have a meeting and write up meeting minutes? Year-end is a big and easy one to have, but as you grow you may want to look at quarterly reviews.
What needs to be recording in these meetings? Your secretary should record the date of the meeting, the place of the meeting, and who is attending the meeting. Then record the agenda for each meeting.
You should review the financials with each member; what happened during the year, what goals you accomplished that year, as well as those goals you didn’t accomplish and the perspective as to why.
Next, record the proposed goals for the coming year. This should, again, start with a closer review of your budgets for this year and ratifying all the actions taken the prior year.
Additional meetings may be required and minutes to be taken, when making bigger or unplanned changes to your operational or marketing strategies. Examples of this may include shopping for new prices on insurance, credit card processing, taking out a loan, buying more equipment, changing already established processes, or changing items in the Cost of Good categories.
A great way to complete the meeting minutes is to have a quarterly review of your business. This can provide you the needed insight to know if the plans you made or the strategies you’ve employed are working or if they need to be adjusted.
Conducting routine meetings can be helpful for you and your Board of Directors to see what has been working or not working over the course of several years and if your business is heading in the right direction financially or from an employee happiness scale. Keep a paper and an electronic file of these meeting minutes. The minutes should be signed and kept with your corporate record book for the purpose of review by any governing board member or auditing entity.