Mr. Fromm regularly assists clients in the preparation of corporate minutes and other compliance and other corporate housekeeping matters. Many owners of small businesses often are not aware of the legal and tax importance of corporations having regular, annual board of director and shareholder meetings. As a result they neglect drafting regular minutes that document such meetings.
Such meetings and related documentation through board of director and shareholder minutes are essential for the following reasons:
- Protect shareholders and officers and key employees from incurring personal liability for corporate debt: For an overview article that discusses some of these issues see Shareholder Protection From Corporate Debt: Piercing The Corporate Veil. In some cases, shareholders, officers, key employees, and bookkeepers can be held personally liable for corporate payroll taxes. For an article that details this personal liability exposure see Personal Liability For Corporate Employment Taxes.
- Tax Protection: In the event of a tax audit, documented minutes support tax sensitive positions such as officer loans, inter-company loans, tax elections, and other tax positions taken on corporate returns. For a discussion concerning the issues concerning reasonable salaries and the auditing of S corporations in this context explore "Reasonable" Compensation: IRS Auditors Favorite Issue.
- Prevent Loss of Corporate Charter: The failure to attend to corporate compliance details can sometimes result is serious legal problems. For example, in Pennsylvania the failure to be compliant can result in loss of corporate name or having it being made available for anyone to use as discussed in the hypertext article entitled Filing Deadline Fast Approaching For Decennial Report for PA Corporations.