If the IRS questions a choice made on your tax return, having well-documented corporate minutes can provide valuable supporting evidence.  When related-party transactions are involved, such as payments, loans or distributions between the company and you or other owners, corporate minutes become especially important.  As an example, the amount of your compensation may be challenged by the IRS.  Providing the corporate minutes that document considerations by the board when approving the compensation can be a defense against a challenge of this type.
The amount of earnings your business retains instead of distributing the funds as taxable dividends is another area that should be considered.  Unless the needs of your business justify the amount, a penalty may be applied to retained earnings over a certain limit. In this case, corporate minutes can help by explaining the reasons your company needs to retain funds – to purchase assets or for working capital, for example.
If your company has a tax-qualified retirement or stock option plan then decisions by the board when adopting or modifying the plan should be relayed in the company minutes. Annual decisions on the contribution percentage made to profit-sharing plans, and the amount of fringe benefits, such as medical reimbursement accounts should also be included.
Contact your attorney if you feel like it is time to update your corporate minutes.