March has just arrived and brought our first real dose of "winter" with it. I don't know about you, but January and February have flown by for me and 2012 has been off to a very busy start. I have been working with many new clients, many of which are starting new businesses and pursuing a new idea (or life long dream). With all of the new excitement I am seeing, I felt that now is a good time to revisit the concept of Piercing the Corporate Veil...
- Because this concept may be new to some of you, a quick explanation may be in order. Quite simply, the act of Piercing the Corporate Veil means that the liability shield that a business owner's Corporation or LLC provides to them is rendered useless and their personal assets are ultimately exposed in some type of litigation against the business. While this may sound ridiculous to you, and in most cases the typical business owner is completely unaware that this can happen, I assure you that it is entirely possible.
- The most common scenario of Piercing the Corporate Veil is that the business owner failed to establish the entity with a firm foundation (perhaps because they took the "do it yourself" approach), did not properly review and document business activities on a regular basis, or allowed other "harmless" actions to blur the lines between personal and corporate separateness.
- In the past few weeks, I have had conversations with multiple attorneys who have had first hand experience with this type of activity and it rarely ends well for anyone. While we all agree that forming the entity with a firm foundation is crucial, it is equally important to maintain it properly on a regular basis through reviews and documenation. I will dig deeper into this in an upcoming blog post.
- I will leave you with this... If you have never taken the time to fully understand the foundation of your business, or what is required to properly maintain it, please contact Safe Shield. We provide a free review of your Corporate documents as well as a plan of action to repair any holes and keep your Corporate Veil secure going forward. More on this in the coming weeks, but feel free to contact Safe Shield today...
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