One of the most frustrating, and typically overlooked, tasks for entrepreneurs is keeping their corporate records up to date. After all, there are far more important and interesting things to attend to in your day-to-day life. But as tedious as this work may seem, it’s critical that these records are set-up, preferably at the inception of the business. Making your corporate records a priority means you’re taking a step towards the success and stability of your company.
Although you’ll maintain and update these records throughout your company’s life, initially, they’ll form the foundation for the company. For example, Articles of Incorporation & Shareholder Agreements outline the basic requirements and guidelines for how your company will be managed. As your business grows, you’ll move onto recording corporate bylaws, meeting minutes and tax returns and more. This isn’t only beneficial from an organized business standpoint, as an entrepreneur you have a legal obligation to ensure your corporate records are completed and maintained.
Why are corporate records Important?
Besides the legal requirements to maintain these records, there are other practical and operational reasons to ensue it’s done in an accurate and organized fashion:
- Prove compliance with provincial and federal regulations
- Protection for owners and companies in the event of an audit or lawsuit
- Shareholder disputes
- Typically asked for when acquiring financing, obtaining insurance or entering into a building lease agreement with a landlord
Having these documents completed, filed, and stored appropriately reduces legal risk to the company and there’s no need to create them on the fly at a higher cost.
Where do you start?
The first step is to commit to dealing with any gaps within your corporate records – your legal counsel can assist with that. While initially it may seem overwhelming, once you’ve identified what’s required, you can proceed with checking them off one by one. The sooner the better!
Here’s a general list of corporate records:
- Notice of Incorporation
- Articles of Incorporation
- Shareholder Agreements
- Corporate meeting minutes
- Corporate resolutions
- Corporate bylaws
- Annual reports
- Accounting Records
- Bank statements
- Vendor invoices
- Sales invoices & cash receipts
- Payroll tax records
- GST/HST & PST Returns
- Income Tax Returns
- HR Records
- Employment contracts
- Termination information
- Employee records
- Benefits enrollment documents
- Vendor / Customer Contracts
- Insurance Documentation
*Please note that this list isn’t comprehensive as different companies may have additional or fewer requirements based on industry and municipal, provincial & federal requirements.
Now that you’ve started compiling the documentation, you should assign one person to file, update and maintain these records. This will ensure updates are completed on a regular basis, internal and external files will be consistent, and when the time comes to access the required documentation (because it will!), they will be easily accessible.
If you’re looking for solid financial health and stability for your business, corporate records is the place to start. At Hydra Management Consulting, our goal is to help small to medium sized businesses achieve the financial stability necessary to accomplish their goals.