Among the many challenges of owning a business of any size is the need to keep track of your organization’s activities. This isn’t just important for helping your business operate efficiently—it’s also a legal requirement. Depending on the type of business entity you operate, federal and Virgin Islands laws may apply to your business in different ways, and it’s your responsibility to understand such laws or have a skilled attorney ready to assist you.
For corporations, state or territorial law determines the recordkeeping requirements by which businesses must abide. Among the records a corporation is required to keep on a permanent basis are meeting minutes, corporate bylaws, shareholders’ records/stock ledger and various records related to the corporation’s accounts. To keep these valuable and critical records safe from fire, flood or other disasters, copies should be stored in fireproof safes, electronically, and/or in a secure offsite location.
Partnerships and limited liability companies (LLCs), meanwhile, are expected to retain records of contributions, copies of the certificate/articles of partnership/organization (if applicable) and any amendments. A list of current partners/members should be readily available. As with corporations, partnerships/LLCs must keep these records on a permanent basis and store copies in a safe and secure location. In addition, financial records should be kept for the amount of time required by any applicable laws.
Corporations, partnerships, and LLCs alike should also keep copies of their tax returns, along with sets of books for various tax-related purposes, for varying numbers of years.
In any discussion of corporate recordkeeping, it’s also important to note that internal policy plays a role in determining how long certain records are kept. In addition, regular destruction of non-essential records should be scheduled and carried out accordingly. The reason why keeping to a regular schedule is so important is twofold. First, given the amount of records generated by many businesses, storing non-essential records can be burdensome for reasons of physical and/or digital storage space alone. Second, in the event of a lawsuit, adhering to a regular document destruction schedule can protect a business against charges that documents were destroyed in response to the suit. Always remember, however, that all records/information relevant to pending or reasonably anticipated litigation must be preserved.
In addition to abiding by the specific legal recordkeeping requirements for your type of business as well as your internal policy, it’s generally a good idea to err on the side of caution when it comes to keeping records of your business’s activities. If you have questions or concerns about your recordkeeping and whether you’re protecting your company’s best interests, speak with an experienced and knowledgeable business law attorney.
Steven K. Hardy is Chair of the Corporate, Tax and Estate Planning Practice Group at BoltNagi PC, a full-service business law firm based on St. Thomas, U.S. Virgin Islands.