Have you incorporated your business? If your answer is yes, then our next question is: do you have a minute book? And if you can answer yes to that one, then our final question: is it up-to-date?
Many of the business owners we at Smart Foundations work with can easily answer the first question but often get a little sheepish when it comes to the second and third. That’s because it’s not uncommon for small business owners to incorporate, pay the requisite fees but not complete a minute book. And those that do frequently don’t remember to maintain and update them on a regular basis.
(As a side note: if you’re a sole proprietor business owner and you’re wondering whether or not to incorporate, read this post now.)
In Canada, all incorporated businesses are required to keep and maintain certain records in what is called a minute book. These records are evidence of your business’s financial and shareholder activities and ensure that your corporation follows all legal requirements.
It basically acts as proof that your company exists. And, if we’re being honest here, it’s not something that is on the radar of a lot of corporations because they see it as a cost, not necessarily a benefit. But in reality, there is a greater cost for not having one. Because when the time comes (and it will come) to present it, it will cost more to recreate one from scratch — or to go through years of documents to bring it up-to-date — then to simply start and maintain one from the get-go.
When we work with a small business owner to incorporate their business, we insist on the need to create a minute book as well.
What goes in a minute book?
A corporate minute book contains all of the organizational documents and records related to your corporation. These may include:
- Articles of incorporation
- Shares certificates
- Shareholders register
- Shareholders agreement
- Copies of government filings
Why do you need a minute book?
Aside from the fact that the records contained in a minute book are required for government compliance, there are many other uses for a minute book.
- Investors and banks often want to review these records to ensure their investment is going to a valid company.
- Buying or selling company property often requires these records to prove corporation ownership.
- Selling or transferring ownership of the corporation may require these records to prove ownership.
Now that you know all about minute books, does your business do business in the U.S.? If you answered yes, then you’ll want to read our next blog on completing and filing U.S. taxes.