A primary reason for incorporation is to protect your personal assets from claims of creditors of the business. You want to be able to keep your personal assets if you can’t pay the bills of the business, or have some other large liability claim against the business not covered by insurance.
This protection can easily be lost, however, if you don’t comply with corporate formalities.
3 Things You Need To Do To Remain Protected:
- Conduct yearly corporate meetings and keep minutes of the meetings.
- Sign all agreements or commitments for the company as an officer of the corporation, and include the company name.
- Be careful in all your dealings with third parties (customers, vendors, etc.) and state you are acting on behalf of the corporation.
If you fail to do these three things, creditors can do what is called “piercing the corporate veil” to access your personal assets.
If you are considering incorporating or need to confirm you are taking the right steps to protect your personal assets, contact Adair M. Buckner to request a free initial consultation*.
*(The free consultation does not cover actual review of documents or giving legal advice on a specific situation.)