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If a business incorporates, it is important that they follow what is considered to be proper corporate formalities from the onset. Failure to comply with applicable laws that dictate proper corporate formalities may result in the loss of corporate status, loss of limited liability, and potential loss of tax benefits associated with incorporating.
A large piece of following proper corporate formalities is learning to create and maintain good records. Types of records you will need to keep include, but are not limited to: accounting and bookkeeping records; bank records; contracts; corporate records; employee records; intellectual property records; permits and licenses; stock records; and tax records.
Other categories of corporate formalities include holding annual shareholder and director meetings, preparing financial statements, keeping financial and corporate records, and if applicable, filing state annual reports (corporate report, franchise tax, and federal and state corporate taxes).
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