The Importance of an Annual Meeting for Corporations

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As you are probably aware, one of the requirements for maintaining a corporation’s existence (and the liability protection that it affords) is that the shareholders and Board of Directors must meet at least annually.  Although most people view this requirement as a necessary evil, it does not have to be a waste of time.  For example, in addition to being a first step in making sure the corporation is respected as a separate legal entity, an annual meeting can be used as an important tool to support your company’s tax positions.

Besides the election of officers and directors, other actions that should be considered at the annual meeting include the directors approving the accrual of any bonuses and retirement plan contributions, and ratifying key actions taken by corporate officers during the year.  The directors should also specifically approve any loans to shareholders to lessen the opportunity for the IRS to reclass the loans as taxable dividends.  In addition, if the corporation is accumulating a significant amount of earnings, the minutes of the meeting should generally spell out the reasons for the accumulation to help prevent an IRS attempt to assess the accumulated earnings tax.

These are just a few examples of why well-documented annual meetings can be an important part of a corporation’s tax records.  We would be happy to be involved in your company’s annual meeting and to assist in making sure tax-effective minutes of the meeting are prepared.  When scheduled shortly before the corporation’s year-end, many companies consider the annual meeting as an opportune time for their accountant and attorney to plan together for the wrap up of the year.

If you have any questions or need assistance in this or any other matter, please contact your Keiter representative or | 804.747.0000

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About the Author

Keiter CPAs is a certified public accounting firm serving the audittax, accounting and consulting needs of businesses and their owners located in Richmond and across Virginia. We focus on serving emerging growth businesses and companies in the financial servicesconstructionreal estatemanufacturingretail & distribution industries and nonprofits. We also provide business valuations and forensic accounting servicesfamily office services, and inbound international services.

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The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.


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