Many San Diego businesses choose to incorporate or set up an LLC (a limited liability company) to take advantage of the benefits offered by these business structures, including protection of your personal assets from company debts and lawsuits. California courts take the division between a corporation or LLC and its shareholders, members, officers, and directors seriously-and recognize that protection from personal liability is a legitimate reason to form a corporation or LLC. Even if courts generally don’t “pierce the corporate veil,” it can happen, but there are things you can do to help prevent putting your personal assets at risk.
For example, here are a few general guidelines to follow when creating and maintaining a corporation or LLC:
- Keep your personal finances and the business’s finances separate.
- Legally transfer ownership of company assets to the business.
- Make sure the business has enough assets or insurance to satisfy potential liabilities.
- Always sign on behalf of the corporation, being sure to include the corporation’s name and your title.
- Act in good faith in your business dealings.
- Keep up with yearly filings, hold corporate annual meetings, keep minutes of the meetings, and maintain proper and accurate records.
As experienced business attorneys, we’re well aware of the potential pitfalls when a corporation or LLC is improperly created and maintained. We’ll advise you on these and other business practices to help keep the business’s identity separate from your own and avoid endangering your personal assets. If you’re thinking of forming a corporation or LLC, we’ll discuss the incentives and other important considerations with you when determining the best business structure for your company. Reach San Diego Law Firm’s business law attorneys at (619) 794-0243.
