| Annual minutes and special minutes are
a written record of important actions by a corporation or limited liability
company. In terms of their importance to the participants, the more participants
in the enterprise, the more important these minutes become for internal
Regardless of the size of the enterprise, minutes have an external use. They may be required in the event of an Internal Revenue Service audit or other governmental inquiry, or in the event they become a condition to the enterprise obtaining a loan from a bank or some other desirable benefit. Finally, they could become vital in the defense of a lawsuit.
The purpose of a corporation or limited liability company, from the legal standpoint, is the protection of personal assets of the participants from company debts and obligations. If your corporation or limited liability company is always able to pay its debts and obligations from its own resources, a one-person operation simply does not need to incorporate in the first place if the sole purpose is the protection of personal assets. It could be, in other words, that any money you spend in the formation of a corporation or limited liability company or in its maintenance is a waste of money. In the event your company is unable to pay its own debts, however, formation so far as the state is concerned is the first line of defense, proper formation is the second, and the maintenance of records (minutes and the like) and proper treatment of the enterprise as a separate entity (no commingling of funds, etc.) is the third line of defense. This is because of the possibility that the courts will look through the corporate veil (meaning ignore the fact that a corporation or limited liability company exists) and hold the individual participants personally liable.
For these reasons, maintenance of proper minutes may be well worth
the cost even where the enterprise consists of a single person. Please
contact us for further information or to order
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