Resolutions

Resolutions are documentation of activities in the Corporation or LLC.  Although many states don’t require that resolutions be maintained for asset and liability protection, especially with an LLC, it is extremely important they are maintained in the case of an audit.
                                                
The IRS and State tax agencies want to see corporate resolutions that explain why specific expenses were made within the business.

If no documentation (resolutions) are available the auditor will likely disallow the deductions and have the shareholders pay the taxes due with penalties.

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