Asset Protection?
One thing I see frequently with clients who have existing businesses is many overlook basic recordkeeping tasks. Often there are no annual meeting minutes, no consents to corporate actions, no stock certificates and no other way to know who has an ownership interest; and sometimes I find clients haven’t even kept their licensing updated and the company no longer exists. Generally, the reason for forming a corporation or limited liability company is to receive limited liability. This normally means that only the business is responsible for its debts and obligations and an owner’s personal assets are not at risk. However, if you fail to respect the corporate entity, you can lose that limited liability protection. One way this occurs is to fail to maintain your business records. So be sure to hold an annual meeting, sign a corporate consent when you undertake a significant obligation such as an office lease, implementing an employee benefit plan, etc. and make sure you act in your representative capacity as an officer or member of the company. All this will go a long way to protecting your other assets in the event the trouble arises with the company.
