One of the few corporate compliance items you must complete to maintain that separation between you and your business is the minutes for your company meetings. “Minutes” is just the fancy word for “notes” but a little more formalized into a structure or template. It’s not difficult and an easy format is presented below.
I’ve previously written about how this paperwork requirement isn’t that bad and shouldn’t be cause for not taking that step toward incorporating your business. This article will show you just how easy that extra paperwork really is.
What Minutes are Required?
According to CA state law there are only 2 general categories of meetings where minutes must be taken: board meetings and shareholder meetings. Since you are a small company and comprise the board and the shareholders you can generally assume that most tasks you need to perform do not require a special meeting or a recording of it. The only mandatory set of minutes that I could find are those of the corporation’s mandatory Annual Meeting. The annual meeting typically lays out the financial information and progress of the previous year and what to expect for the coming year. It is also the time when officers of the corporation are voted upon and selected.
However there are a number of other important company decisions that should be recorded in the minutes format and stored in the company records in the event your company is scrutinized for compliance and separateness from your personal finances and choices. These decisions tend to be smaller and easier to record so I’ll sample some of them here and have a separate post on the Annual Meeting later.
Here are a few events that should be recorded in meeting minutes:
- Annual Meeting
- Adoption of Agent for Service of Process
- Adoption of Company Bylaws
- Contracts Prior to Incorporation
- S Corp Election for Tax Purposes
- Opening of Bank Accounts/Loans/Lines of Credit
- Special Meetings of the Shareholders
Most of these are one-time meetings which keeps your paperwork to a minimum. The Annual Meeting is, uh, annual obviously, but the rest of these you’ll typically only worry about when you first start your corporation. Let’s take a look at the S Corp Election for Tax Purposes since it’s fairly simple and provides a good template for the others (and if you’re a small company you’re probably wanting an s-corp). Here’s what mine looked like:
Let’s Break it Down.
The example above is pretty straightforward and typical of a set of minutes. It is short and contains just five main sections.
The header is pretty simple and consists of just 4 lines:
- A title which briefly describes what this document is
- A declaration that this is a minutes document, “MINUTES OF DIRECTORS MEETING OF”
- The name of your corporation
- And where your company is incorporated.
2. Time, Place and Persons Present
When and where was the meeting held and who was there? That’s what the next 2-3 paragraphs are about. The language is a little formal/legal but it comes down to when, where and who. Notice that I was clear about a quorum being established and then listed the members present along with their titles.
A quorum is the minimum number of members required to make the meeting valid and allow decisions to be made and acted upon.
3. The Business Discussed
What did you talk about? The language again is a bit on the legal side of things and is written as if a large committee of people deliberated for hours over the topic. As it’s just me you can bet I had it wrapped up in less time than it took to type the minutes out.
This is the part where you list the final decisions made as Resolutions. A resolution is just a fancy word for a firm decision. Here just summarize your decision and then always add a resolution that gives the officers of the company authority to carry out that decision.
5. Sign and Date
Obviously sign and date the minutes. The only interesting part here is that I’ve signed it with my “Secretary” title instead of CEO or some other title. Can you guess why? Remember that meeting minutes are part of legal corporate compliance.
See the Pattern?
As a second example here are the minutes from my meeting to choose an Agent for Service of Process:
Notice the same elements in the same order? Easy, right? As far as paperwork goes, I believe in you and your ability to knock these out whenever you have a major corporate decision. Aside from the Annual Meeting, which I will tackle later, most years I don’t have any other meeting minutes to report – it’s just business as usual.
So go ahead and incorporate knowing that the paperwork really isn’t daunting at all.