How Corporations Work

A company lives by the decisions of the director(s) and voting members and the management of the officers or managers made at duly authorized and convened stockholder or member and director or voting member meetings. The Secretary's or archivist's job is to record and keep the records of these meetings and decisions to show that the officers or managers were authorized by the Directors or voting members for the actions they took, and that the directors and officers are carrying out the wishes of the Stockholders or and that the voting members and managers are carrying out the wishes of the Members. Typically we find that the average small Corporation, Not-For-Profit Corporation, or Limited Liability Company owner is not aware of the need for or has not attended to proper initial Corporation, Not-For-Profit Corporation, or Limited Liability Company ("Entity") record keeping of meetings or other necessary annual documentary evidence of doing business as an entity. Many of these individuals are unaware that they are wide open to assaults on their personal assets from the IRS and from lawsuits. Past history has shown that Corporations, Not-For-Profit Corporations, or Limited Liability Companies that are improperly documented or undocumented as to by-laws or operating agreements, meeting minutes, employee agreements, meeting notices, medical plans, etc. are treated as no Entity at all by both the courts and the IRS. This means that both the liabilities of the Entity and its status could become that of a partnership or sole proprietorship. Then both the liability protection and the taxes are could be recast to the Entity owners' personal assets and tax returns. You can imagine the impact this would have on an Entity's managements' and owners' personal estates. The Entity 's tax return could be recast to a schedule "C" or a Partnership Form 1065 filtering down to form an owner's Schedule E on their personal tax return with the resulting change in tax liabilities which could be seized from their personal assets.