Costly Mistake #1: Believing that LLC’s don’t have to follow the same rules as a Corporation - - or that LLC veils have never been pierced. Click HERE for whole article

CASE STUDY

United States v. Pisani

Pisani, a medical doctor and sole stockholder in a corporation, was held personally liable for Medicare repayment debts because the court ruled that the corporate veil should be pierced due to undercapitalization, lack of corporate formalities, lack of corporate records, lack of officers/directors, and ultimately an alter ego of the owner

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Is your Corporation or LLC for real?

Or are you just playing dress up? 

Every day business owners form Corporations or an LLC to protect themselves and then never think about it again. This is a huge mistake! There is a long list of items that need to be taken care of every year to maintain your corporate protection.  

 

 

False Sense of Security

Forming a corporation or an LLC can give a false sense of security to business owners by giving you the impression that your personal assets are protected.

The reason this sense of security can be false is that when a business fails to remain compliant the protections afforded by the corporate veil no longer continue to protect the business owner's (your) assets.  

Most business owner's don't realize just how vulnerable their personal assets truly are when it comes to potential litigation. Something as minor as paying for personal dry cleaning from a company debit card can pierce the corporate veil and allow a potential lawsuit to gain access to your personal assets. Corporate Correct's mission is to keep your corporate veil strong and intact so you can focus on your core competencies and not worry about losing everything you've worked so hard to achieve.

 

The Need to Stay In Compliance

Studies show that up to 85% of independently owned business owners are not aware of the compliance requirements mandated by the state in which they do business.  If you are in this vast majority, this means that if you have a lawsuit or lien filed against your business, then your personal assets -- your home, your cars, your boat -- could be seized to satisfy an outstanding judgment.  The best protection against this happening to you is to be sure that you are in compliance with your state’s regulations on maintaining a “corporate veil” -- the legal separation that creates limited personal liability protection for business owners.

To maintain a corporate veil you must observe certain corporate formalities, no matter the size of your company. These include the keeping of records on:

• Corporate bylaws -- the company must adopt a set of bylaws outlining how the business is to be operated and setting the dates and times for regular shareholders meetings and Board of Directors meetings.  Bylaws also outline the actions and responsibilities of the corporation’s officers, Board of Directors, and shareholders.
• Corporate bank accounts -- bank accounts must be set up in the name of the corporation and kept separately than those of the individual owner.
• Stock ledger -- the company must maintain a stock ledger that details the issuance of stock certificates and the amount of stock owned by each shareholder.
• Corporate meeting minutes -- regular meetings must be held and a written record of those meetings must be kept.
• Business conducted in the corporate name --all transactions and agreements must be done in the name of the corporate entity, not the individual owner, shareholders or officers.
  
  

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Failure to maintain compliance can result in what is called “piercing the corporate veil”, which is a legal finding by the court that in fact a business does not exist separate from its owner -- in other words, the business has been operating as an “alter ego” instead of as a separate and distinct business entity.

Fortunately, it has never been easier to ensure compliance.  Corporate Correct will:

• Monitor and remind you of important statutory filings and meeting dates;
• Create, deliver, record and store your entity meeting records (such as calls, notices, waivers, minutes, and resolutions);
• Help discover the important business transactions that you need to formally approve and document; 
• Issue ownership certificates and manage ownership records for shareholders, stock option holders, members, managers, and partners; 
• Create necessary time sensitive reports, ledgers and other compliance management reports; 
• Manage Stock Option Plans (option grants, vesting schedules, and option exercises); 
• Monitor your investment notes for monies borrowed or loaned;
• Provide you with an electronic Corporate Record Book that can be accessed online from any computer, anytime, anywhere through a secure password protected portal; 
• Allow you to store and retrieve additional business and personal documents anywhere in the world through your ClientArchive™ e-vault. (Articles, Bylaws, contracts, employment agreements, photos, journal entries, etc.);
• Validate statutory filings and current status for conducting business. 

Giving you the proper coverage that will protect your personal assets against any business claims.

We have compliance services starting as low as $60 a month. We also offer discounts of up to $300 for payment in advance.

To talk with us about making sure you have all the compliance bases covered, Sign Up. Contact Us.