We cannot stress enough how establishing and maintaining the proper corporate records is vital in assuring personal limited liability to a corporation’s shareholders. Every corporation should keep a record book that contains a copy of the Certificate (Articles) of Incorporation, By Laws, initial and subsequent minutes of directors and shareholder meetings which should document major corporate decisions, and keep an accurate stock register.
The corporate minutes reflect decisions made or actions taken by the corporation's shareholders and/or its board of directors during a meeting. Again, keeping good minutes is absolutely vital to shareholders who want to maintain their personal liability protection. If the corporation fails to act like a corporation and the business suddenly runs into legal trouble, a court may decide to disregard your corporate status. This opens the doors for creditors, and even the IRS to easily "pierce the corporate veil" and hold shareholders personally liable. It is simply amazing how often this happens to owners of small businesses.