Forming a corporation or LLC gives your business a legal identity separate from your own. That separation is the whole point — it is what limits your personal liability when the business faces a claim or debt. But that protection is not unconditional. To maintain it, business owners are expected to observe certain formalities, and one of the most commonly neglected is keeping proper corporate records.

Corporate resolutions are written records of decisions made by the board of directors or shareholders of a corporation. When your business takes a significant action — opening a bank account, entering into a major contract, taking out a loan, bringing on a new officer, or approving a distribution — that decision should be documented in a resolution. Meeting minutes record the proceedings of shareholder or director meetings, including who was present, what was discussed, and what was decided. These are not bureaucratic formalities. They are evidence that your business is being operated as the separate legal entity it is supposed to be.

When corporate records are missing or sloppy, it creates a vulnerability. In litigation, a plaintiff’s attorney may argue that the business is not truly separate from its owners — a concept known as “piercing the corporate veil” — and seek to hold owners personally liable for business obligations. Lenders, investors, and buyers conducting due diligence will also ask for corporate records, and gaps in those records can slow a deal or raise questions about how the business has been run. Keeping clean, current corporate records is one of the simplest and most important things a business owner can do to protect the legal structure they worked to create. If your records have fallen behind, it is not too late to get them in order.