Most small business owners understand the importance of shielding themselves against personal liability arising from their corporate activities.  At The Roth Law

Group, we counsel our corporate clients to observe recognized corporate formalities to avoid "piercing of the corporate veil" which could leave business owners

personally liable for the liabilities of their businesses.

For example, many new business owners are not aware that comingling of personal and business funds can have dire consequences.  In order to avoid this, we

suggest that our clients establish and fund business bank accounts before they conduct their first corporate transaction.  Case law has established that business

owners who use their business accounts for personal expenses might be liable for comingling.   

Next, it is important that accounting records be well maintained and kept up to date and that the company be adequately capitalized so that it is able to cover its

liabilities.  For instance, if a company is ordering on credit without the means of paying its suppliers, the owners might be later found personally liable if the business

later defaults.  Also, this helps avoid comingling of accounts between business and personal.  

Insurance is also important and we recommend that our clients obtain a Commercial General Liability Policy as well as Director and Officer insurance prior to

beginning operations.  Again, if your business is not adequately insured, the possibility of personal liability is very real. 

Finally, good record keeping and staying up to date with the Secretary of State is an ongoing obligation.  If a business fails to file its annual report, they may lose their

"good standing" status, which essentially wipes away thier corporate shield. 

These examples are not intended to provide an exhaustive list of corporate formalities and business owners are encouraged to consult with a corporate attorney to

make sure they are in compliance with all formalities recognized by law.