Corporate Minute Books

[TaxBird]

[Sorry this is not a tax question...we need another forum; some kind of 'catch-all' category]

Can we (CPA's & others) update Corporate Minute Books for clients?

A client emailed me with this question today. While I'm capable of (and not particularly averse to) doing this, I don't know if a third party who is not a lawyer can (as I'm not sure where the line of 'practicing law' is drawn).

I can't find any guidance on this...does anybody know or could give me a reference on this?

I would greatly appreciate it.

Thanks in advance!

[BOB W]

For the most.....

part, I don't see a problem doing it myself. When I form a corp I do everything myself. Accounting firms are getting into doing this regularly. Is it a problem? Could be, but it has become standard practice in the industry for those that know how to do it.

On the other hand, a client can do it themselves even if the do it wrong.

[TaxBird]

part, I don't see a problem doing it myself. When I form a corp I do everything myself. Accounting firms are getting into doing this regularly. Is it a problem? Could be, but it has become standard practice in the industry for those that know how to do it.

On the other hand, a client can do it themselves even if the do it wrong.

The client doing it themselves is one thing. But if they hire me to do it, then that implies that they think I know something beyond what's in the forms book doesn't it? Is it ok to just update the work of a lawyer?

I think this is what's creeping me out...I need to know where the line gets drawn in order to feel comfortable. Is pulling a form from a forms book and filling in blanks the same as 'drafting'? And even if the client knows you're pulling the forms from a form book do they still think you know something 'legal' about it? Maybe my whole problem would be solved by placing a big fat disclaimer somewhere advising them that they should have legal cousel look over the documents (or some such language).

Don't get me wrong, I've done them in the past. However, last year sometime, I read about a CPA who, if I'm not mistaken, got her license revoked for drafting an operating agreement for an LLC. I wish I would have saved it so I could read the entire case and find out what defines 'drafting'. I'm usually pretty good about saving that kind of stuff but I can no longer locate it.

In any case, after I read that I was pretty creeped out...the last thing I need is to get in a brew over some bone-headed maneuver that I didn't realize was bone-headed at the time.

[BOB W]

Operating.........

.............. agreements are a complete different story. Minutes that just record routine issues I do, but operating agreements or anything that is beyond routine recordings I leave for the lawyers.

[TaxBird]

.............. agreements are a complete different story. Minutes that just record routine issues I do, but operating agreements or anything that is beyond routine recordings I leave for the lawyers.

Yea, I think that's what I'll do. Keep it to the routine recordings.

See, these guys have more than simple recordings going on. Maybe that's why my spider-sense is tingling.

As always, thanks Bob!

[oceanlovin'ea]

Present??

Wouldn't you have to be at the meeting to record the minutes? Or do they write down the minutes and you just write them over on the approved forms?

Linda F

[Jiggers]

Corporate Minutes

Depending on your state law, the preparation of corporate minutes could be considered practicing law.

I prepare them and am not a lawyer. I prepare them as a secretarial service for the client. Attached is my cover letter that is attached to the corporate minutes.

"Attached are the corporate minutes for the following meeting:
Special Meeting of Board of Directors held on December 27, 2006 declaring a bonus.

The information in these minutes were provided by this Corporation.

Please review these minutes and all individuals should sign in the appropriate places. Please file these signed originals in the Corporate Record Minute Book.

Please advise if there are any changes, corrections, or additions to these minutes.

The preparation of these minutes is provided as a secretarial service and as a convenience for the Corporation. The preparation of such and the content and nature of these minutes are not to be considered the practice of law by the preparer.

Competent legal advice should be consulted for any interpretation of these minutes."

I use a template for their minutes and just fill in the changes or necessary information for the client.

[OldJack]

From a federal tax standpoint corporate minutes of meetings or minute book is not required. Therefore, unless your state statutes requires them they are not needed.

[veritas]

Well you may be

exposing yourselves. In Oregon not only are there sharholder minutes but there are director's minutes. I would say leave it to the client or have an attorney prepare them. I prefer the latter. Don't we have enough to do?

[Jiggers]

Corporate Minutes

From a federal tax standpoint corporate minutes of meetings or minute book is not required. Therefore, unless your state statutes requires them they are not needed.

While they may not be legally required, the IRS requests them during a corporate audit. Everytime.

One of my corporate clients had their minutes, that I prepared as secretarial services (@ $70.00 per hour!) and the auditor read every page of the corporate minutes.

The corporate minutes authorized 100% vehicle use for the major shareholders/officers and the 100% vehicle use was not challenged.

The corporate minutes authorized large quarterly bonuses for the major shareholders/officers and these were not challenged.

In fact, there was no change on this corporate audit.

I still do the corporate minutes for this client only. And, again, only as a secretarial service. And my fee went up to $80.00 per hour Jan 1, 2007.

[veritas]

Wait until your client

gets sued for something and see how good those minutes will stand up. And the attorney does everything they can do to break the corporate veil.

[Snaggletooth]

Old Geezer Jack is Right

Refer to the post by Old Jack. As a tax preparer, I believe you are letting the client suck you into something which you may have no business doing, with the possible exception of being a witness, or attesting to the effect of something that bears on their taxes.

These things are the responsibility of the board of directors, officers, and stockholders at the very most. Most of the time they receive a nice expensive minutes book from the attorney who helps them incorporate. It's not unusual for a minutes book to cost $100 or more. And the attorney advises them to have meetings annually or even more frequent.

For my customers, however, beyond that point the minutes book simply collects dust. And the corporation is absent any official policy or adoption of regular business practices that can substantiate the client in an audit.

In my state (and every state of which I'm aware) there can be no transactions with stock whatsoever without a corporate resolution. Corporate resolutions are guiding documents as well, and these things are almost never done properly. Stock certificates collect dust along with the minutes book.

However, just because clients ignore these responsibilities does not somehow translate into a tax accountant responsibility to insert himself as the Savior of their recordkeeping. Sometimes it becomes necessary for a corporation to do things to take advantage of tax law, and we can advise of the desired final effect, but the board of directors should still actually perform this and not have the accountant do it.

Sova, Old Jack, and other CPAs, does not the AICPA have a position on this??

[Black Bart]

Minutemen

...It's not unusual for a minutes book to cost $100 or more...attorney advises...meetings annually...beyond that point the minutes book simply collects dust...there can be no transactions...without a corporate resolution...these things are almost never done properly...Stock certificates collect dust along with the minutes book.

I used to do one of these -- a mom (veep) and pop (prez) op who had me update routine documents in their nice, leather-bound (cost-$100) book each January. They meticulously held annual "meetings" at which no business whatever was transacted because no one was present (although they did have me give them notice of the meetings -- after the fact, of course). Mom went to a CPA (phftttttzz to you, Jack) and had the the corp killed off when Pop died off.

But; look for the bright side I say. I salvaged the book for $5 and it's been faithfully collecting dust ever since.

P.S. Say Jig; you think maybe you're overpaying that secretary?

[OldJack]

In fact, there was no change on this corporate audit.

And there probably would have been no change if the corporation did not have corporate minutes. The things you mention are not required to be documented in corporate minutes. The auditor was only reading the minutes to find something wrong.

Don't get me wrong, I write minutes for certain clients to document certain things, but I keep in mind that what you write down can be used against you. Minutes of meetings are not "legal" documents that can only be written by an attorney (of course a few attorneys would like to think they are). What I define as a legal document is what would be written to present to a court of law. In my state attorneys are too busy chasing ambulances to worry about what I do.

[OldJack]

Sova, Old Jack, and other CPAs, does not the AICPA have a position on this??

Not that I am aware of, but most of us small firm CPA's pretty much ignore the AICPA as they are run by the big firms for their own benefit. The AICPA double talk is worse than the IRS. I dropped my membership in the AICPA more than 20 years ago and have never found a reason to renew. But, I still have the AICPA group life insurance thru my state society.