How Thin Is Your Corporate Veil?

By Paul Sponaugle Tuesday, September 15, 2009

Whether forming a Corporation or an LLC, the majority of entrepreneurs are looking for a way to separate themselves from the debts and liabilities of their business entities; otherwise, we’d all be sole proprietors and not consider the personal consequences of a failed business venture. Most think that by simply forming the company the job’s done, and they never take the time to organize the entity so it will provide a “veil” of protection. A good way to make sure your company is protecting you from the very start, is to GET A CORPORATE KIT!!!!

Too often I hear clients say how they can’t find their Articles of Incorporation, or that a bank wants to see company documents verifying authorized individuals. These are usually the folks that were looking to save a few bucks and a chose a filing only service at the time they formed their companies. If they had bought the kit, they would’ve had a place to keep their documents, and would’ve had that corporate resolution approved by the Board of Directors showing authorized persons elected for banking. It’s just better to be prepared.

For corporation or LLC owner’s, a well documented kit should include an organization chart to give the business person an overview of how the company is organized. When completed properly, the sample bylaws, resolution forms and minutes of meetings will help strengthen the veil of any LLC or corporation. Remember, when it comes to advice, whether legal or financial, nothing can replace a good lawyer or accountant, respectively. However, lawyers are not needed to draft boilerplate minutes, bylaws, membership agreements, etc. That can save you and your newly formed company a lot of money in the beginning. For issuing stock or membership certificates having a corporate kit is a real time saver also, with official certificates imprinted with the company’s name on them, a company seal and transfer ledger right at your fingertips. For LLCs, a sample operating agreement will help the members get organized quickly, so they can begin concentrating on business.

Do it right and make sure you get your corporate kit!

*Disclaimer*: Harvard Business Services, Inc. is neither a law firm nor an accounting firm and, even in cases where the author is an attorney, or a tax professional, nothing in this article constitutes legal or tax advice. This article provides general commentary on, and analysis of, the subject addressed. We strongly advise that you consult an attorney or tax professional to receive legal or tax guidance tailored to your specific circumstances. Any action taken or not taken based on this article is at your own risk. If an article cites or provides a link to third-party sources or websites, Harvard Business Services, Inc. is not responsible for and makes no representations regarding such source’s content or accuracy. Opinions expressed in this article do not necessarily reflect those of Harvard Business Services, Inc.

More By Paul Sponaugle
Leave a Comment
* Required
* Required, will not be published