Tuesday, December 4, 2012

Dentist has Questions about S-Corp Meeting Minutes

I am the only member of an S Corp. I need help with regards annual corporate meeting and keeping of minutes. 

What do you do in an annual corporate meeting when you are the only member? 

What makes up the agenda/minutes of these meetings?

Does an attorney need be present?

I have read that the annual CPA meetings could count as the corporate meeting, any one with a different view?


I've often said that the minutes we prepare for our client meetings have sufficed under IRS audit and should suffice as "corporate" minutes. That said, this is for IRS purposes when they audit and want to make sure the taxpayer is treating their corporation as they should.

I can't speak for any other legal purpose like a lawsuit; however, we have had clients with legal actions, domestic, partnership issues, etc., and when "minutes" have been requested these have been provided and it's never been a problem, meaning, there's never been a response to say these aren't proper minutes or not in proper form.

The minutes we prepare are on our letter head, have clients name (LL, PCL, PLLC, PA, PC, Inc., etc) location, date, time, and attendees. Then we either attach or note agenda and what was discussed, decided, tasks assigned, etc.

Some of the items we have on every agenda: year-to-date results, projections, year-to-year comparisons, other corporation matters, individual tax projections and other practice-business issues. Of course with each client there can be other issues added to the agenda based upon their specific needs.

Again, if asked to produce for an IRS audit these have sufficed. It’s the same with other legal issues I mentioned above. Check with your attorney and\or CPA to make sure they are comfortable with this.
The purpose of doing minutes is to act like you're a corporation since you created one and reporting taxes as one.

For example, if a taxpayer has reported their income as an S-Corporation for 10 years and saved payroll taxes on S-Corporation dividends of say $50k over those 10 years and they were audited and found to NOT be in compliance, i.e., acting like a sole proprietor, then the IRS could take the position that they really weren't an S-Corporation and assess the $50k in taxes plus penalties and interest.

The bottom line is, if you're going to create and report your taxes as a corporation, make sure you do the things a corporation is supposed to do.

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