Imagine you have just been served with a lawsuit concerning a business issue and you find that you have been named personally in the lawsuit. Why were you sued when your company performed the work? After all, you formed a corporation to protect your personal assets. Unfortunately, if you fail to operate your company properly, a plaintiff can “pierce the corporate veil.” This means you may be personally responsible for the acts of your company. Now your house, your savings, and your future are at risk.
Now is a great time to review your corporate records to ensure that your business is legally up to date. Corporate paperwork, while sometimes time consuming to maintain and compile, is essential to the proper operation of your business. The records you keep will often protect you in the event that you are ever involved in a lawsuit. Paperwork often seems like an aggravating little detail that can always be put off, but the lack of properly maintained corporate records can be a potential disaster for your business and your personal financial assets. There are three items you should review in order to protect yourself.
One of the easiest and most basic things to do is to check your corporate filings with the Georgia Secretary of State. Are you registered with the Secretary of State? Are all your annual registrations up to date? If your business was formed in another state and you are doing business in Georgia, have you registered with the Secretary of State?
Another step, while more time consuming, is to review your corporate books. Do you have corporate books or a place for all your corporate documents? Do you have an operating agreement or partnership agreement with your partners? If you are a corporation, did you elect Statutory Close Corporation Status? If not, have you documented the minutes from your annual meeting? Have you documented all major decisions your business made in the past year in your corporate books? Resolving these issues can help protect you and your company.
Finally, review the documents on which your business forms relationships with clients. Do you enter into contracts with your clients? Do you have clients approve purchase orders, estimates, or invoices before you perform work? Do these forms clearly set out the work to be performed, the schedule, and when and how you are to be paid? Do these forms adequately protect you in the event that your customer doesn’t pay you? The failure to have proper procedures and documents often results in lost income, disputes, and lawsuits.
If you are unsure if your corporation is in compliance or if your forms are adequate, then you may have a problem. Our business is to help solve your problems. We would rather you see us now to preempt any problems than see us later when the fix will likely be much more expensive. To learn more about other business solutions we provide, please visit our website at www.SpoonerLaw.com.
Read the complete March 2012 Newsletter from Spooner & Associates, PC
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