The most common reason people incorporate is to shield themselves from personal liability for the debts and actions of the corporation. Failure to act as a corporation could result in this shield being penetrated and you as a stockholder or director being held personally liable.
Accurate corporate records, including up to date minutes from every stockholder and director’s meeting show that your company is acting like a corporation. Failure to hold annual meetings and keep accurate records could result in shareholders and directors being held personally liable for actions of the corporation.
In addition, sloppy and inaccurate corporate books could prevent your corporation from receiving financing or keep you from selling your corporation. Often potential lenders and/or buyers will want to review your corporate books as part of their diligent search. Also, do not forget the possibility your corporation could be audited. Inaccurate and out of date corporate books could cost you money.