Corporate Record Keeping:
The business owner’s eye view
by Steve Chambers

www.SteveChambers.com

If you own a business, deciding whether or not to incorporate is a major decision.  For tax reasons and for personal protection reasons determining the best legal structure for your business is one of the most important business decisions you have to make.  I have owned two businesses and I have chosen to incorporate my businesses both times.  The first corporation was a C Corporation, which proved to be a hassle for me in terms of record keeping and administrative work.  The second time I incorporated I chose to be an S Corporation, which was much easier to manage.  Choosing to incorporate was a good decision.

I remember trying to decide whether or not to incorporate.  It struggled with it.  I spent literally weeks reading books and manuals and pouring over the Internet trying to decide which business entity would be best for me.  Should I stay a sole proprietor or choose to become a corporation?  What about an LLC?  Should I incorporate in my native California or establish a Nevada Corporation?   Certainly there had to be a different set of advantages to each entity.  I found that there is a lot of hype and misinformation out there that you needed to sift through before you could get a straight answer so it took some time to decide.

Once I made decision it was relatively easy to actually set up the corporation.  I simply needed to file my corporate paperwork with the Office of the Secretary of State for the state my business was operating in.  (A little bit of advice, unless you live in Nevada there is no real advantage to having a Nevada Corporation).  Once that is done you are in business, but you can’t stop there.  There are still a lot of things you need to do once you have your corporation up and running.  Failure to do these things; to act as a Corporation, can result in your Corporation being revoked.

What I didn’t realize at the time was how important corporate record keeping is to maintaining your legal and personal protection.  In order to enjoy the legal protection and tax savings from my corporation I needed to operate it legally as a corporation.  There were tricks as to how to do this easily and efficiently.  In all my weeks of study and research I had never learned the importance of this, nor did I have an exact idea of how to do it correctly.

Keeping accurate and up-to-date corporate records is very important to you as the business owner. I have learned that it is also one of the most neglected aspects of running a business.  Most corporation owners simply don’t do a god job at this for two reasons. One, they don’t realize the importance and two, they forget.  Usually, nobody asks to see your corporate records until you are in court, and because of this it is easy to be lackadaisical in their maintenance. This can be a mistake.  You need to find a way to make keeping your corporate records simple, but most importantly, you need to keep them.