There are tons of different types of business structures out there. There are S Corps, LLCs, and sole proprietorships, to name a few. How to Keep Meeting Minutes for an S Corp?
However, an S Corp is one of the most popular forms of business, with roughly 5 million S Corps in the United States. These businesses offer tons of different benefits to their business owners.
If you’re interested in learning just what is an S Corporation and how to keep Meeting Minutes for S Corp, this guide is for you. Let’s jump into what you need to know!
What Is an S Corp?
Before we jump into keeping minutes as part of your S Corporation, we need to break down what an S Corp actually is. After all, there’s no point keeping minutes for a company if you don’t even know how the structure works!
An S Corporation is a type of corporation that passes deductions, losses, income, and credit through shareholders. This is done for tax purposes and prevents the business from being double-taxed.
To form an S Corporation, you’ll have to incorporate your business first. To do that, you’ll have to submit your Articles of Incorporation or a Certificate of Incorporation to your state and federal government. Then, you’ll need to pay a filing fee.
After the government approves your new corporation, all shareholders in the company will have to sign and submit a few more forms. Then, the partners in the corporation can start taking care of the business’s taxes on their forms.
Requirements for Starting a Corporation
If you want to start an S Corp, you’ll need to meet a few criteria first. For one thing, you’ll need to be a resident of and living in the United States.
Secondly, you’ll only be able to include allowable shareholders in your business. This includes estates, some types of trusts, and individuals. It does not include nonresident aliens, partnerships, or corporations.
S Corporations are also only able to have one type of stock. They can’t have more than 100 shareholders in their company.
Finally, S corporations have to be eligible institutions. A few examples of ineligible institutions include insurance companies, international sales corporations, and several types of financial institutions.
Requirements for S Corp Minutes
Now that you know a little more about what an S Corp is, it’s time to look at what the requirements are for S Corp minutes. At the moment, there are no federal laws surrounding minute keeping for S Corps.
Instead, each state determines its own laws about how corporations organize and run their records and books. Just about every state in the country requires S Corporation shareholders to host regular meetings and keep notes of those meetings.
The notes, which are known as minutes in the business world, summarize what happened during the meeting. They’ll record any votes that shareholders made and what the results were.
In addition to these basic requirements for minutes, many states also require senior management to keep minutes during their meetings.
Regardless of what type of meetings you’re keeping or which state you’re in, you don’t have to file your minutes. However, you do need to keep your minutes on hand in case the IRS requests them. Typically, the IRS will ask S Corporations for their minutes before conducting an audit.
It’s good to know that while most states require minutes, not all of them do. Oklahoma, Nevada, North Dakota, Kansas, and Delaware do not require you to keep minutes, although it’s still a good idea to do so.
Content of S-Corp Minutes
If you’re planning to start a business, and more specifically an S Corp, you’ll need to know what content your minutes should contain. That way, you can make sure that you’re staying compliant.
Most states require minutes to include a list of the individuals present at the meeting and those who couldn’t make it. They also require the minutes to detail each item discussed at the meeting and record any votes taken.
Often, subcommittee and board of directors meetings will include a vote approving the minutes from the previous meeting. The meeting minutes should always include the results of that vote.
S Corporation Consent for Action Without a Meeting
One thing to be aware of when it comes to S Corp minutes is that many states allow S Corps to take specific actions without holding a formal meeting. This is only true when a specified percentage of shareholders agree to the action.
The agreement has to be formally written down. And, it’s usually a practice that’s only taken by smaller corporations who don’t have a large number of shareholders.
Some S Corps choose to do this because it gives them greater flexibility to make fast decisions. Just make sure to include the written consent of the shareholders in any meeting minutes relating to the decision.
What Happens if You Fail to Comply
If you’re not convinced that meeting minutes are essential, we suggest you think again. While it’s easy enough to let keeping minutes slide, especially in smaller S corps, this could have some significant consequences for your business.
For one thing, if you fail to comply with state requirements regarding S Corp minutes, you could lose your S Corp status. That could put you at risk for tax issues, including difficulty filing your income tax return.
On top of that, if you don’t keep proper company records, you could lose your liability protection. The same goes for not keeping the books correctly in your business.
What that means is that if any shareholders get individually sued, the court can check out how closely they followed state minutes requirements. If it turns out they weren’t compliant, they could wind up with serious consequences that affect the individual rather than the business.
How to Keep Meeting Minutes in an S Corp
Now that you have all the necessary information about S Corps and meeting minutes, it’s time to look at how to keep meeting minutes. That way, you’ll be able to ensure your minutes are fully compliant.
Step 1: Get the Agenda
The first step to keeping good S Corp minutes is to get a copy of the upcoming agenda of the meeting well in advance. This will help prepare you for the meeting and make it easier for you to keep notes when it’s taking place.
Step 2: Note the Administrative Facts
Before the meeting begins, you should note down a few key facts about the meeting. This includes the company name, the time and place of the meeting, and what type of meeting you’re holding.
You’ll also need to note down what individuals were present and absent and make specific notes of the chairman. Often, the chairman will also be the keeper of the minutes, which is another position you should note.
Step 3: Make an Outline
With all the administrative details out of the way, it’s time to create an outline. You can use the agenda to make the meeting notes to have a good idea of what the flow will be.
For each item on the agenda, create a few bullet points. Then, leave those spaces blank so that you can fill in crucial talking points and other important information.
Step 4: Note Actions on Previous Minutes
When you first get started in your business meeting, the team will take a vote to approve or modify the notes from the previous meeting. Make a note of the action that the group takes in your current meeting minutes.
Step 5: Note Motions, Notices, Appeals, and Points of Order
The next step is to note down any motion made at the meeting and any subsequent actions. Make a note of the name of the person who called the meeting and what any corresponding votes were.
You should also write down any notices that are given, any pauses in the meeting due to broken rules, and any appeals due to those pauses. Finally, it is vital to take note of any rulings made and the reasons for those rulings as given by the chairman.
Step 6: Attach Reports and Note the Adjournment Time
When the meeting wraps up, attach any reports handed out to the minutes. Make a note if you make an attachment. Then, note the time that the meeting was adjourned.
Step 7: Submit and File the Minutes
Once the meeting is over and you’ve wrapped up the minutes, submit them for approval. Once they’re approved, file them in your company’s corporate file.
Submit the minutes for official approval. Typically, minutes are approved at the following regular meeting.
Become a Pro at Keeping S Corp Minutes
Now that you know just what is an S Corp and How to Keep Meeting Minutes for an S Corp, you’re ready to start your own business. With these tips and tricks, you’ll be in great shape and on your way to running a successful business.
Are you looking for more tips and tricks on running a successful business—S corporation or not? Don’t forget to check out some of our other fantastic resources while you’re on our website.
S Corp Dissolution: 12 Steps to the Complete Process
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Reasonable Salary for S Corp Owners
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