There are many situations where approval by the directors of a corporation is important.  For example, complete and accurate minutes of Board meetings can be vital as a defense against unfavorable tax consequences.   The minutes may serve as proof of a business’ intentions should its tax return positions ever be challenged by the IRS.  Minutes should also be used to indicate that executive compensation increases and bonuses have been approved and ratified by the board of directors, along with detailing reasons for the decisions. With this information, the IRS is less likely to rule that the corporation is using a wage increase to disguise a dividend and avoid double taxation or to argue that an executive’s salary is not “reasonable.” Corporate minutes can also confirm that loans made to executives are not taxable dividends or compensation.   Excess accumulated earnings are subject to tax but can be limited or eliminated with evidence included in corporate minutes that indicate business reasons to not distribute the earnings. Some of the things a corporation can include in its minutes are plans to expand, plans to buy new inventory or equipment, meeting pension and profit-sharing obligations, providing for potential losses from lawsuits, maintaining sufficient working capital, and projecting investment in business-related properties.  To achieve maximum tax savings for a business and employees, the corporation retirement and stock option plans have to satisfy IRS rules. If they do, employees can defer income taxes on contributions to and earnings from the plans until the funds are distributed to them, while the corporation may take a current deduction for the contributions.  Resolutions adopted by the directors should include the approval of the annual company contribution and other actions taken with regard to the plan.