If your corporation finds itself in legal trouble, your business records will play an important role in crafting a defense. For example, if you are accused of having not paid a vendor, your records can provide evidence that the vendor was actually paid. However, it can be difficult to know which business records are important to keep without the help of a corporate lawyer.
The Purpose of Business Records
The primary reason to have business records is so you can more easily show government agencies that you are following the law. If you have been in business for a long time, you might wonder if there are some documents you may eventually want to dispose of. This is something you can discuss with a corporate lawyer.
In general, you will want to dispose of documents that have customer data that you no longer need. Rather than throwing them away, you should always shred them. It's especially important to shred information that contains Social Security numbers, addresses, phone numbers, and other important pieces of information.
An Example of Business Records Being Important
If you form a corporation, you will need to have business documents that prove that your company operates like a corporation. Otherwise, the courts could ignore the fact that you own a corporation and hold you personally liable.
For your company to be treated like a corporation, it must act like one. This means that the shareholders must elect a director. If you are the director and you sign a document, this would not be a document on behalf of you personally but would instead be a document on behalf of your corporation.
Great documentation is the best way to avoid the accusation that your corporation is not actually a corporation. If you are concerned about whether your documents will be able to protect you from these issues, you'll want to have your records examined by a corporate lawyer.
Type of Records to Keep
You will need to maintain your Articles of Incorporation, the amendments that you filed with the state, the names of directors and officers, the names and addresses of shareholders, the actions taken at shareholder meetings, and the corporate bylaws that spell out how your company will be operated.
However, each business is different and there might be additional records you must maintain to avoid legal headaches in the future and to maintain your status as a corporation. You could check here to learn more about corporate law.