Orange County business attorneys help companies to select the right kind of business structure. Many different factors go into the selection of the type of business entity that is right for an organization. Knowing what type of business entity a company should create requires a careful consideration of tax issues, as well as an understanding [ ] The post What Are Corporate Formalities And Why Do They Matter? appeared first on Brown & Charbonneau, LLP.
Many people incorporate their businesses in order to avoid becoming personally liable for the company s losses. When a business is incorporated, owners and shareholders cannot lose more than the money they invested into the business. If the company is not incorporated, but instead is operated as a sole proprietorship or partnership, the business owners could become fully responsible for covering the organization s financial losses. For example, if a partnership went bankrupt or was sued, the partners who own it could be held personally liable for paying for the partnership s debts or the judgment against the organization. The liability protection of a corporation is extremely important, but it is not always absolute. Piercing the corporate veil means that the distinction between the owners and the business is stripped away. The owners become personally responsible for the financial condition of the business, just as they would be if the company was a sole proprietorship. Piercing the