It is vital by law for every company to record information pertaining to their company, and one can achieve that with a corporate record book. A corporate record book is essential for every company to record information. Here in this article, we describe a corporate record book and template for LLC and how to get it.
What Is a Corporate Record Book
A corporate record book is a book that companies use to record all the necessary paperwork. A corporate record book contains
- Articles of incorporation,
- Bylaws,
- Meeting minutes
- The stock certificate ledger
- Stock certificates
- Stock certificate stubs
- Stock transfer documentation
It is important to keep your organisation’s corporate record book at your corporate headquarters.
You can also keep your company’s records “in the cloud,” but you must make sure your server is safe because these records may contain sensitive data and proprietary procedures.
Importance of Corporate Record Book
A corporate record book is significant and essential to keep in every company. The importance cannot be undermined and that is why we will be discussing the reason why a corporate record book is a necessity for all corporations.
#1. Historical Evidence.
A corporate record book can serve as a historical record of significant business transactions that have occurred over the course of an organization, including, but not limited to, significant acquisitions, sales, loans, and leases.
It can also help to prevent objections from minority shareholders and support the steps that may follow in the event of an IRS audit.
#2. A Tax Audit.
One of the first items an IRS agent will request to review during an IRS audit of a corporation is the corporate record book. The corporation will be in the awkward situation of having to bring the corporate record book up to date prior to the audit if it hasn’t been updated or maintained at all.
Updating the minute book in time for the audit can be a costly and difficult task, depending on how far out of date it is. An officer or director can support their good behavior and performance of their obligations and responsibilities to the organization by keeping an up-to-date corporate minute book.
#3. Third-party Evaluation
Banks and lenders frequently request to look at a corporation’s minute book, or at the very least its articles of incorporation, bylaws, and most recent meeting minutes or consent resolutions. And it will pose a potential threat if it is not available or up to date because when attempting to reconstruct what actually transpired in any given year at a later time, the failure to maintain an updated minute book can provide problems.
When trying to memorialize an event that happened several years ago, it is common for shareholders, directors, and officers to disagree over what happened, when it happened, and why. Annually updating the minute book helps to avoid this problem.
Despite the fact that the precise criteria can vary slightly based on your state and the sector you work in, there are a number of documents that all organizations must have in their records. However, in general, these are some of the things you ought to mention:
Corporate Record Book for LLC
A common choice for businesses is an LLC because an LLC record book is simpler than other corporate formalities.
A corporate record book for LLC may require less paperwork, but it must still abide by certain guidelines in order to maintain its limited liability status (documents required vary in each state depending on their laws).
Every corporate record book for LLC should at the very least keep and maintain the following records because keeping good records does help you keep track of your progress. Every company will have a unique record-keeping system that suits them. You may carry out your plans as long as they are legal and functional.
The IRS establishes regulations regarding the length of time you must keep records, particularly those that pertain to tax matters. Seven years is the longest duration. Therefore, unless there is a good business reason not to, it is generally recommended to keep all records for seven years.
By maintaining these records, you protect your “corporate veil,” which creditors and litigants may otherwise attempt to exploit by demonstrating that you disregarded corporate protocol. They might even attempt to seize your private property as part of the settlement.
What Corporate Record Book For LLC Should Contain
The corporate record book must contain some paperwork that you should submit to the Secretary of State’s office when forming an LLC.
Every LLC should preserve a copy of its founding documents. These are known as articles of organization in the majority of states. They will at least include the following:
- Name of LLC
- The company’s goals
- Business address
- Name and address of the LLC’s registered agent.
The only other records you must typically maintain for the state are the yearly and biennial reports. You should retain a copy of each document if you make any changes.
You will also receive a certificate or other similar document from the Secretary of State acknowledging the creation of your LLC; you should retain this with your formation documentation.
#1. Operating Agreement
The cooperate record book should also contain the operating agreement. The operating agreement for an LLC is a key document that describes how you run your company. You should retain a copy in the company’s main office, along with any modifications. Typically, the operating agreement will include the following details:
- Capital investment that each member makes and understanding regarding additional contributions (if any).
- The process for allocating gains and losses.
- Every member’s ability to receive payouts.
- Voting rights for members.
- Procedures for new and returning members for admission and withdrawal.
#2. Member and Management Information
Member and management information: It is important to keep member and manager information current. The very minimum is to keep a list of all current and former members, complete with names and addresses. Managers should also keep the same information.
#3. Meeting Minutes
Most LLCs are not required by state law to hold meetings, according to meeting minutes. However, a mandate for meetings could be placed in the operating agreement. The best course of action in this situation is to have someone record precise meeting minutes that include the following details:
- The attendees’ names.
- Decisions are made through votes.
- Any further information that is useful.
Even though meetings are not required, some state laws could require you to record the proceedings in writing.
#4. Finances and Taxes
Financial statements, financial documents, and commercial contracts that an LLC develops must be preserved for a minimum of three years.
#5. Income tax returns
For the past three years, the IRS has had the right to audit any tax return. All LLC income tax returns at the federal, state, and local levels must be preserved for at least that long. If fraud is suspected, there is a legal loophole with no statute of limitations, so you should maintain your tax documents forever.
All relevant records should be retained as tax-related expenses, credits, and revenue. Keeping the following for at least three years is part of this.
- Deposit receipts for the company.
- Statements for all accounts using credit cards.
- All invoice.
- Checks were void.
- Charges paid.
Paying employment taxes is necessary if your LLC employs employees. The IRS advises that you maintain all employment tax documents for at least four years. Additionally, you should maintain their W-4 forms, payment information, payment information, and personal information.
Corporate Record Book Template
A corporate record book template contains the format and information a corporate record should contain. It can be easily accessible and useful, especially for guidance. An original corporate record book template should have where you must record all your necessary paper works like
- Your incorporation documents (and any amendments to them)
- Your corporate bylaws in writing
- Board meeting and annual shareholder meeting minutes
- Return of income taxes (and proof documents for any deductions you make)
- Records of employment taxes
- A list of your resolutions (significant decisions made by the board), such as those regarding the purchase of the real estate, alterations to board rules, and sizable numbers of layoffs or hiring
- A copy of each of your yearly reports
- Data about stock exchanges (and other securities)
- Monetary records
- Credit card statements and bank statements
- Personnel records (hires, terminations, applicants
The time spent in business or professional meetings are documented in corporate minutes. For a corporation to maintain its legal status, it must record these minutes on file. In particular, this applies to organizations with limited liability or nonprofit status. A formal record of these corporate minutes will guarantee that your organization is abiding by the law and can maintain its unique corporate character.
The corporate minute’s document should include the meeting’s details. This will contain information on the meeting’s time and place of holding as well as its objective. If required, the meeting’s results can be included. For record-keeping purposes, the form should also include the name and contact information of the individual filling it out. For as long as the company is in operation, any corporate minutes document should be retained in the records.
When Should You Use A Corporate Minutes Template?
If you have to write up what was discussed at your meeting and the decisions that were made at a board of directors or shareholder meeting, you should utilize a corporate minutes template.
Who Must Maintain Meeting Minutes?
All C Corporations are required by the majority of states to maintain records of significant company decisions and significant meetings.
Delaware, Kansas, Nevada, North Dakota, and Oklahoma are the states that do not now mandate the keeping of meeting minutes. Minutes are not necessary for businesses that are organized as LLCs.
What Details Ought to be Recorded in Meeting Minutes?
The crucial information that was exchanged, any significant choices that were made, and any actions that were performed should all be included in the minutes of meetings. Although minutes do not need to be exact, they should contain enough information to act as the “institutional memory” of the company.
- The date, time, and venue of meetings are often included in the minutes.
- List of persons absent from the meeting, along with their names and if they missed any of the meeting’s proceedings
- Any voting acts and each person’s vote
- When the meeting was called to a close
Which Acts or Decisions Might You be Required to Record?
Examples of the kinds of information you should record include:
- Board of directors and shareholder meetings take place annually.
- Introducing new officers
- Boosting compensation or hiring more personnel
- Monetary transactions: opening of new bank accounts, loans, and credit cards
new stock is released
How to Get a Corporate Record Book
You can get a corporate record book by purchasing it from stores. Despite the fact that most office supply stores provide the components you can in corporate kits, you may want to buy a “corporate kit” from one of several businesses.
Ensure you document the corporation’s first filing date, filing date, and fee payment. These documents will be among the first ones you enter into the company record book.
Ask the state for a certificate of food standing. Put this in the company’s records. Include copies of the bylaws and any filed revisions, as well as the articles of incorporation.
Make a copy of your bylaws and write your own as well. Make a formal record of each corporate action. Every action the corporation does should be supported by documentation in the record book.
How to Prepare Your Corporate Record Book
You can create the minutes for the corporation’s inaugural meeting in the first section. It should also include
- The choice of officers and directors as well.
- The resolution approving the shareholder rights and voting agreement in the written shareholder rights and voting agreement.
- Any initial contracts for services that the corporation has with attorneys and accountants.
While the corporation is operating, keep this section open to house all meetings and minute documentation. Likewise, keep track of any upcoming elections or resignations here.
Add all stock certificates issued here. Each certificate’s owner must be listed along with the certificate’s issue date, the recipient, and their contact information (age, residence, individual or corporate entity).
Keep any corporate stock or shareholder transactions here as well. Include here as well how many shares of the corporation each individual or entity owns. Share modifications will also be noted here.
Include any loans or gifts the corporation has received from its members, officials, or directors. This is especially true when funding is first provided for a business startup. This is where you can document decisions, loan agreements, and their acceptance must b.
List the addresses of the company’s accountants, attorneys, insurance agents, and other professionals that the company hires to conduct business. The fourth portion should contain this information.
Include the location, date of purchase, and receipt of money for retainers and binders for all legal and insurance documentation.
You must document every significant acquisition, sale, formation, or modification of a policy, as well as any expansion or termination as a resolution of the corporate officers.
Any agreements between the corporation and other people or entities should be formalized using your corporate seal or a notary. Include in this area any documents that have these seals.
Is a Corporate Record Book Necessary?
To demonstrate that the corporation is operating correctly in accordance with Internal Revenue Service requirements, to establish the corporation as a distinct legal entity, and to uphold the corporate shield from liability, corporate records are necessary.
How Do I Write a Corporate Record Book?
You can start writing a record book by the following steps. Begin by providing the actual name of your company, and the date, time, and location of the meeting.
- It is important to keep track of who attends. Make a note of any participants who are not present. Anyone arriving late or departing early should be noted. Keep track of the meeting’s facilitator and whether or not a quorum was present.
- Note the meeting’s objectives, such as the election of new executives, the issuance of stock, the discussion of financial activity, the annual meeting of shareholders or directors, or the hiring of new employees.
- Recap the discussion of the agenda items. Take note of any documents that the attendees are examining. Include a copy of the documentation with the minutes.
- You must keep track of any votes you have.
- Take note of the adjournment time as well as the time and date of the next meeting.
- Complete Meeting Minutes by Typing Up the Meeting Notes
- Follow your company’s requirements for who must review the draft remarks.
- Minutes are frequently distributed to the board prior to the next meeting.
- The “vote to” item is usually the first item on the agenda for the next meeting. Check your company’s policy to see who must sign the meeting minutes.
- Approved minutes should be preserved in the same place as your other important company records.
Do Corporate Books Need a Seal?
The corporate seal serves as the corporation’s official mark. The corporate seal acts as the corporation signature. Every legal or official document issued by the corporation requires a corporate seal.
However, as a business became more flexible and technology ushered in the digital age, the corporate seal became out of date and, to some extent, a burden. Corporations, LLCs, and states in the United States are no longer required to have a corporate seal. Despite the fact that official stock certificates and a corporate seal were once required for corporations, like spurs on a boot, these historical artifacts are no longer functional or significant.
A corporate seal’s legal authority is still widely acknowledged by states, but modern technology has resulted in a diminution in these powers, and the corporate seal and official stock certificates will eventually become obsolete.
What is the Purpose of a corporate seal?
Depending on state law, using a corporation or firm seal may have varying legal ramifications. It may be viewed as evidence that the document was authorized, or it may provide some proof of a document’s validity, but it may not be sufficient evidence in and of itself to support the document’s authenticity. And it’s possible that it’s just a symbolic act with no influence on its legitimacy.
What Should a Corporate Seal Look Like?
Company seals typically have a 38mm circular face with space for up to 50 characters. It must contain
- The legal name of the company
- The sort of business (an abbreviation such as LTD instead of LIMITED would be acceptable)
- Year of formation and formation state
Where Do You Put the Corporate Seal?
Consider the corporate seal of your company to be its legal signature. You can put the corporate seal on the company headquarters.
Conclusion
In every business, keeping records is crucial. You will find it easier to maintain accurate and complete records now that you are aware of the value of a corporate record book and how to establish one. Remember that updating your company’s record book is vital if you want to avoid mistakes.
FAQs
Who has the responsibility of managing the business of a corporation?
A corporation is run by its directors and officials. A board of directors is a group of directors who work as a team. The board of directors is the corporation’s governing body. It has the authority to exercise all of the corporation’s functions and manages the company’s operations and affairs.
Do I need to trademark my business name?
To have a trademark, you do not need to register it; trademarks become valid once they are used for commercial reasons. However, trademark registration provides broader protection and makes enforcement easier.
How do you draft articles of incorporation?
- The corporation’s name and postal address.
- Name and address of the registered agent
- Timeframe for inclusion
- the nature of the business
- The type and number of issued shares.
- Powers of incorporation designations
- Lines for the date and signature
References
- STEPS TO START AN LLC in the US: Everything You Need to Know
- BUSINESS TRUST: Definition, Pros & Cons, and How To Set It Up
- Corporate Accounting: Job Description and Salary
- AFFILIATE MARKETING BOOKS: The Top Best 2023 Comprehensive List
- Financial Audit: All you need, Simplified!! (+ Detailed pdf)
- AUDIT MANAGEMENT SYSTEM: Types and Best Auditing Tools In The Market
- IS AN LLC A CORPORATION OR PARTNERSHIP? All You Need
