Your Watkins Firm San Diego corporate attorneys protect the corporate veil of your company while helping you to strengthen and grow your business. That is the entire purpose of business: to take reasoned risks in order to profit. However, the corporate veil is what separates you (and your spouse) personally from the risks, debts and contingent liabilities of the business. How can the Watkins Firm help your company to thrive while guarding the protections of that corporate veil?
Why Do You Need a Corporation in the First Place?
Why do you need a corporation in the first place? Why don’t you just go out and do business? It isn’t just the “brand” of a business name. The existence of an LLC, Corporation or Management Service Organization (MSO) protects the personal assets of its owners. The corporation is a separate “person” in the eyes of the law. A separate entity, from you, personally. Therefore, one of the primary responsibilities of any corporate officer or shareholder is to help to protect that corporate veil.
What Can a Business Owner Do to Threaten the Corporate Veil?
Watkins Firm corporate attorneys protect the corporate veil by providing sound counsel and guidance from the moment of an entity’s conception through every step of establishing, growing and ultimately selling a business, medical practice, healthcare entity or corporation.
There are things a business owner, corporate officer or shareholder can do that will “pierce the corporate veil” of protection. These actions remove the protections of the LLC, S-Corporation or C-Corporation and allow creditors to pursue those shareholders and owners’ personal bank accounts, home equity, investments and other assets to satisfy the debts and liabilities of the company. Simply put, the three fastest ways to pierce the corporate veil of protection is to defraud or deceive your customers, commingle business assets with personal assets, or ignore corporate governance and compliance.
The act of defrauding a customer or individual is to obtain money, goods or services from them through the use of deception. A business person who misrepresents a given fact knowingly, purposefully or recklessly (not caring if it is true or false) in order to gain any sort of benefit or economic gain can be legally guilty of defrauding that customer or business partner. Deception is a close cousin to fraud, and is the act of purposefully misleading another using fraudulent actions or misrepresentations. You shouldn’t hold yourself out as a viable and strong business able to fulfill business contracts if you don’t have sufficient resources or aren’t properly capitalized to fulfill the terms of those agreements.
Commingling is a common mistake that well intentioned businesspeople often make. Commingling of assets means using a personal account or possession for business purposes or using the money or assets of your business for personal reasons. Commingling is especially common when small businesses are first starting out and money is tight.
You must resist the temptation to pay your personal car payment or bills directly from your business accounts or credit card. You cannot use a company to simply create the illusion of a business, it must be a legitimately separate, distinct entity. You must protect the integrity of that entity in order for it to be able to provide the protections of an LLC or corporation, and to prevent creditors from being able to pierce the corporate veil of protection to come after you personally for business obligations or liabilities.
Corporate governance and compliance is required to establish, validate and solidify the protections of the corporate veil. There are many components of an effective corporate governance strategy which includes keeping corporate records such as the minutes as well as any operating agreement or shareholders’ agreement and bylaws up to date. Corporate governance ensures the actions of every company representative, from top to bottom, are acting in a professional, ethical and legal manner.
Your Watkins Firm San Diego Corporate Attorneys Protect the Corporate Veil
Your Watkins Firm San Diego corporate attorneys protect the corporate veil of your organization and work with you to plan an execute the strategies which lead to growth and additional profitability.
There can be gray areas along the way, challenging moments both professionally and personally. The attorneys at the Watkins Firm are not here to tell you what you can and can’t do, or to simply handle legal matters such as contracts. We are here for you as valuable business partners and advisors. Your Watkins Firm attorney draws on more than four decades of experience in businesses just like yours, and we provide sound trustworthy advice as a trusted advisor in your business.
We invite you to review our podcast, Episode 10 – The Importance of a Strong Corporate Attorney, the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today and learn more about how the Watkins Firm can help to take the next profitable step. It doesn’t matter where you are in the course of your business: start-up, growth, challenges, disputes or mergers and acquisitions. The Watkins Firm is an experienced, proven legal partner who can and will help you every step of the way.
