Before December 31: The Resolutions Owner-Managers Sign at Year-End

Your salary or bonus

Pay to an owner who works in the business is a decision of the directors. If your accountant recommends a year-end bonus, declare it by resolution on or before the year-end and record the amount and the date it will be paid.

• Check that the salary paid this year matches what the directors approved, or approve the change now.
• Declare any year-end bonus in a resolution dated on or before the year-end.
• Canada: a bonus the corporation deducts this year has to be paid within 180 days after the year-end.
• US: an S corporation should pay its working owners a reasonable salary through payroll before taking distributions.
• Sample wording: Resolution approving an owner’s salary or bonus.

Dividends, if your accountant recommends one

The directors declare a dividend by resolution before it is paid. For your personal taxes, the payment date usually decides the year it counts in, so a dividend meant for this year has to be declared and paid before December 31.

• Confirm the corporation passes the solvency test in its corporate statute before the directors declare it.
• State the class of shares, the amount and the payment date in the resolution.
• Pay it on the date in the resolution and keep proof of the payment.
• Give your accountant a copy for the tax slips or forms that follow.
• Sample wording: Dividend resolution.

Money between you and the corporation

Owners often lend money to the corporation, or take advances from it, during the year. Each is a loan. Because you are usually on both sides, the directors approve it after you disclose your interest.

• Match the shareholder loan balance in the books to a signed resolution and a loan agreement or note.
• A loan from the corporation to you can be taxed as income if it is not documented and repaid on time. Ask your accountant which deadline applies.
• Between related corporations, such as a holding company and its operating company, each corporation needs its own resolution.
• Sample wording: Shareholder loan resolution and Intercompany loan resolution.

Borrowing and major purchases

A line of credit, equipment loan, vehicle lease or guarantee signed this year should have a directors’ resolution behind it, even if the lender never asked for one.

• Gather the loan, lease and guarantee documents signed this year.
• Check that each one has a resolution approving it and naming who could sign.
• If the lender used its own form, keep a signed copy in the minute book.
• Sample wording: Borrowing resolution.

Bank signers

If anyone joined, left or changed roles this year, the people who can sign at the bank should match a current directors’ resolution.

• Compare the bank’s list of signers with the people who should be able to sign today.
• Remove anyone who has left the business.
• Sample wording: Resolution to change signing authority.

Directors and officers who joined or left

• Record every appointment, resignation and removal with its effective date.
• Update the directors’ and officers’ registers.
• Check whether the change also had to be reported to the government registry. That filing is separate from the resolution.
• Sample wording: Director appointment or removal and Officer appointment or removal.

Shares issued or transferred

• Check that every issue or transfer this year has a resolution, an updated securities register and a new or cancelled certificate.
• Make sure the register and your accountant’s records show the same shareholders on the last day of the year.
• Sample wording: Share issuance resolution and Share transfer resolution.

Last year’s annual approvals

December is a good time to check that the previous year’s annual records were signed: the directors’ approval of the financial statements and the shareholders’ annual meeting or written resolution.

• Approve last year’s financial statements if the directors have not.
• Sign the shareholders’ annual resolution in place of a meeting, where the law allows it.
• Use the annual corporate minutes checklist for the full list.
• If several years are missing, start with the minute book cleanup checklist.

Sign and file them

Most small corporations pass these decisions as written resolutions instead of holding meetings. A written directors’ resolution generally needs the signature of every director; if you are the only director, your signature is enough. The rules for shareholders’ written consents vary more by jurisdiction.

• Date each resolution when it is signed. If a decision was made earlier and never recorded, say so in the resolution instead of backdating it.
• Attach what the directors relied on, such as the financial statements, a loan agreement or your accountant’s calculation.
• File the signed copies in the minute book and send copies to your accountant.
• For a format to start from, see the written consent of directors template.

If your year-end is not December 31

Review the corporate items, such as borrowing, bank signers, directors, officers and shares, at your own financial year-end, and time any year-end bonus to that date. Salary and dividends paid to you still count in your personal tax year, which ends December 31, so talk to your accountant before December about anything meant to fall in this year.

Common questions