Corporations have to follow sets of rules from the Internal Revenue Service and from the state in which the business is incorporated.
As anyone knows who has tried to do the paperwork for a business, the rules can be quite challenging to follow. Also, because your business can be audited, your corporate records need to be easily accessible in case you need to show them to a requesting entity.
A corporate book is a book, usually a binder, where you can keep all your important business records. This includes everything from your official company seal to your articles of Incorporation to your certificate of good standing.
If you at least have copies of all your important documents in one place, you will be able to get to them quickly and even run your business more smoothly. You may choose to use a corporate minute book instead, which has much of the same basic information but is a simplified version.
What Does a Corporate Book Look Like?
Your corporate kit will help you get your records in order so they can be organized into a book. Your corporate book is usually a 3-ring binder so that you can add or take away pages as needed. On the front, you can place your corporate seal, if you have one.
Within the binder, you will have several tabs, so the documents are organized by type. Here are some of the sections you will have and an explanation for each:
- The articles of Incorporation, which will contain all the basic information about the company, such as the company’s name, the company’s registered address, the names and addresses of the company directors, why the business was created and its purpose, the corporate by-laws the number of shares, voting rights, etc — this information should be at the front with the operating agreement and corporate resolution, as it proves the business is validly registered and operates under legal rules.
- The by-Laws, which explain how the business is organized internally, such as who has what responsibilities among the shareholders, officers, and directors — the business is not allowed to conduct any business which doesn’t follow the rules laid out in the by-laws.
- The resolutions of the directors and shareholders and meeting minutes, which must occur at certain times throughout the year — for instance, key decisions made at the end of the year are put into place with written resolutions, giving the business direction as it goes into the next year.
- The registers of directors, officers, and shareholders, including identifying and contact information.
- The shareholders’ ledger, which keeps track of the shares and their ownership, including a sales and transfer ledger.
- All the forms filed for the business, such as annual filings, trademark applications, etc.
- Share certificates or stock certificates, showing the ownership of the share.
- The shareholders’ agreement(s) (if any). Shareholders may choose not to have this kind of agreement.
Staying On Top Of Your Records
The most important rule when it comes to keeping up your corporate book is to process your paperwork immediately. Waiting increases the chances of losing the documents you need or letting the papers pile up. Have a corporate book will only help you if you keep it up-to-date.
How Does Keeping a Corporate Book Help Your Business?
Your corporate book will assist you in day-to-day business as you seek answers, such as who owns stock or who can make important decisions.
Most people realize the importance of good record-keeping if they have ever been audited because they can see how much more smoothly the process goes when they have all the documents they need ready in one place.
Another important use of the corporate book is the enforcement of contracts, as you will have all the contracts and documents you need in one place if you are ever dealing with someone not living up to the terms of an agreement.
The basic breach of contract elements are:
- Prove the existence of a contract, which you can do if you have access to the contracts your business is a party to; every contract must have an offer, which is accepted by the other party, followed by consideration or payment of some sort to back up the agreement.
- Prove that you did your part to meet the terms of the agreement, or that you had a good reason for not doing what you had promised.
- Prove the other party did not meet the terms of the agreement.
- Finally, you need to prove that you suffered some sort of loss, usually financial, because of the other party’s refusal to perform.
It is easy to see how having access to all the information in your record book will help, as you will have not just the contract but any business records showing how your business would have benefited from the contract.
Business Lawyers Can Help From Start to Finish
If you are starting a business in Arizona, you need to understand the different kinds of businesses and what kind of business would be best for your plan. If you have a small business or a sole proprietorship, you may have different needs than if you are in business with several people.
Your business lawyer can assist you in deciding whether you should have the protection of a limited liability company, and if so, how to form an LLC.
Your business lawyer can also help you determine what rights and responsibilities your board of directors will have, and other important information.
Finally, your business attorney can help make sure your corporate documents are in order and help keep in compliance with state and federal laws.