HOW TO MAINTAIN YOUR COMPANIES ASSET PROTECTION
One of the biggest problems we encounter is a company that failed to maintain its company in a way that provides them with continued asset protection. When you start a new business, you should create a corporate structure to safeguard your assets. When starting a company you must choose a corporate structure that works for you. And while they all have different formalities, unfortunately, many businesses fail to operate in a way that affords them with continued protection.
Corporate Records
Corporations in most states require the maintaining of corporate records. The use of this term here has nothing to do with taxes or invoices, though such documents should be maintained in accordance with your states and federal regulations. Corporate records in this context refer to the required documentation of stockholder and board of directors meetings. Most states require that these individuals meet annually, if not more frequently, to discuss the operation of the business. What must be discussed in these meetings will vary according to your operating agreements and state regulations. Not only must these meetings occur, but an accounting of them must be maintained within the company. This accounting can be minutes, resolutions, etc.
While most states do not require limited liability companies to hold these meetings or maintain these records, demonstration of these documents further exemplify the standing of your company and could help you in a lawsuit where the other party attempts to pierce the corporate veil and hold you personally responsible for the debt of the company.
Financial Transactions
All of the business’s banking transactions should occur as if the business were a person separate from yourself. The business should have its own bank account with bank cards and checks. You should never deposit checks payable to your company in your own account. The funds in the business account should only be used for business purposes. Never use your business account to pay your personal expenses. Not only does this limit your business’s ability to protect you individually, you could also be held individually responsible for misconduct.
Licensing
While the licensing requirements vary from state to state, it is important to stay current on your areas licensing requirements. Most counties, states, etc. require licensing for each area you plan to operate in. For example, if you are operating a floor cleaning business in southern Nevada, you may need a Nevada state business license, a Clark County license, a license for North Las Vegas, Henderson, Boulder City, etc. Additionally, these licenses will require annual maintenance. Failure to maintain the appropriate licensing may lead to big fines and penalties.
These are just a few of the formalities that must be adhered to in order to maintain your business. You should always consult an attorney before forming a company not only to discuss corporate structures, but also to discuss licensing and other legal issues to make your corporation compliant with locate rules. If you have any questions regarding this article or would like to discuss the maintenance of your company with one of our attorneys, please call us at (702)448-4962 to set up a free consultation.
