Seems like not a day goes by that someone doesn’t ask me about how to create Minutes for their company. I think there’s a lot of confusion where Minutes are concerned, and a tendency to make them harder than they really are. Minutes, or their alternative, Consent Resolutions, are nothing more than a written record of decisions made during a meeting. They can be a word-for-word transcription of the events of a meeting, or they can be a series of highlights, noting the major items discussed at a meeting, the actions that were decided, and the final decisions that were made.
Who Prepares Minutes?
In a corporation, 90% of the Minutes are connected to Director’s Meetings. The directors in a corporation are elected by the Shareholders, and oversee the operations (which are actually carried out by the Officers). The directors call the shots in term of what the company does and doesn’t do, and the Officers get it done, sign the paperwork, and so on. The other 10% are connected to Shareholder’s Meetings.
In an LLC, Minutes are connected to either Manager’s Meetings or Member’s Meetings. If your LLC is Manager-Managed, then the Managers will be the ones meeting and making decisions 90% of the time. It’s very much like a corporation in that sense. If your LLC is Member-Managed, though, then the Members will meet regularly to discuss and implement business decisions.
What Goes Into Minutes?
The detail that goes in is up to you. Some people like to have lengthy notes of what was being discussed, the pros and cons, and the final outcome. Others really just like to make bullet-point notes of what was discussed and what was decided. There really isn’t a right and wrong way to approach this, although more detail is always helpful.
When are Minutes Prepared?
Corporation Shareholders need to meet at least once a year. You’ll find that written right into state laws. They may need to meet at other times to approve major corporate decisions – it really depends on the language in the company’s Bylaws. We talk about what those decisions might be in our product, The 60-Minute Handbook. The Directors can also meet as infrequently as 1 year, although from a practical standpoint this may not work, and they may need to meet on a regular basis.
Unlike corporations, LLCs don’t have to hold yearly meetings of the Members, regardless of how they’re managed. On the other hand, there are lots of advantages to having Minutes – not the least of which is proof that you can show to the IRS or others that your LLC is functioning as a proper company and not as an alter ego for you.
Where are Minutes Stored?
The idea that you have to have a formal Minute Book that can cost upwards of $100 is just an idea. The reality is, you can store your Minutes in any way that works for you, be it $2 binder from Target, a file folder in a cabinet, and so on. Just make sure they’re readily available if you need to get at them suddenly.
Why are Minutes so Important?
Minutes are a written record that you’re keeping up with corporate formalities, and that you deserve to have the legal protections that corporations and LLCs offer. They also create a written record of decisions made by the management of your company – something that you can refer back to at a later date, in the case of an argument or uncertainty in what was decided, or how to proceed. You can guarantee that in the case of an audit or litigation, your Minute Book will be one of the first things you’re asked to produce.
To learn more about the who-what-when-where-why and, most importantly, the HOW concerning Minutes, consider picking up our new product, The 60 Minute Handbook. You’ll get an eBook that goes in depth on these points and more. Plus, you’ll get over 60 examples of Minutes, prepared in open Word format, that you can use and tailor for your own business.