Incorporating Your Business Always Limits Your Liability: Or Does It?
One of the main reasons to incorporate your business along with tax considerations is to limit your personal liability in case you and your business are sued. Nobody wants to expose their personal bank accounts and other assets to seizure due to a court ordered judgment.
However, many people fail to understand that in addition to filing for incorporation, the business actually has to operate like it is a business, and not just an extension of the incorporator. This means that even a corporation consisting of one person must maintain corporate bank accounts separate from personal accounts, maintain corporate filings and make sure that contracts and other documentation are signed by individuals in their corporate capacity. It is also important that the business, regardless of its size, maintains sufficient capital and liquidity so that it can pay creditors.
Failure to do any of the things cited above can lead to a Plaintiff attempting to “Pierce the Corporate Veil” or contending that the business is not adhering to corporate formalities and, therefore, the owner should be held personally liable for monies owed. This situation can be easily avoided by hiring the right attorney to make sure that a new company is properly filed and taking all steps to properly comply with the law.
At Schwam-Wilcox & Associates we can assist you in filing the necessary documents to create your corporation or LLC, and can also handle all your corporate needs to get you all of the protections offered by incorporating your business. Contact our office to discuss your individual needs with an attorney by calling 407-245-7700, e-mailing to firstname.lastname@example.org or by visiting our website at www.cbswlaw.com.