Once you’ve formed your LLC or corporation you’ll need to create and keep entity records. Entity records are those records an LLC or corporation needs to show that it is functioning in the manner required by both the Internal Revenue Service and the state of formation. It substantiates that your company is being run as a separate entity, distinct from its owners. But more importantly, a company records book helps maintain the corporate veil that protects a company’s owners from personal liability for company’s debts, obligations, and acts.

The company records book is an essential tool that tracks and records major decisions, events, and operations. It is where meetings, transactions and decisions are recorded. The book is typically made up of seven sections, each of which contains specific categories of documents.

Every formally organized company should create and maintain a company records book, which includes all the documents related to the formation and ongoing compliance transactions of the business as a legally distinct entity. You should keep both physical and virtual copies. The physical copy should be kept in a secure place and be readily accessible for inspection by company members and shareholders and, if audited, the Internal Revenue Service or state revenue department.

You can create your own company records book using a three-ring binder and a set of dividers with at least seven tabs. Or, you can purchase a customized company records kit from a legal stationer or document filing service that includes slipcase, forms, pre-printed dividers, and company seal. Either will work just fine.

Section One includes the file stamped copy of the charter document, amendments, letters of transmittal, filing fee receipts, and pre-formation agreements. You may also want to have a certified copy of the charter document or a certificate of good standing.

Section Two is where you’ll keep government registrations and applications. This would include IRS Forms SS-4, 2553, and 8832, state and local business licenses and permits, and registrations with state revenue and employer agencies.

Section Three contains the Operating Agreement if you formed an LLC or the Bylaws if you formed a corporation

Section Four consists of owner agreements, such as buy-sell, non-compete, and employment agreements.

Section Five contains the ownership ledger, which lists the name and address of each owner as well as the number and type of shares or membership units each of them owns.

Section Six houses the blank membership or stock certificates along with cancelled certificates.

Section Seven is made of every other key company document: leases, employment contracts, annual reports, financial statements, tax returns, and the like.

Finally, you’ll want a summary sheet listing important contacts, like your attorney, CPA, registered agent, and other professionals that work with you to keep your company operational and in compliance.