This is the fourth post in our series on issues related to starting a business in Orange County, California. Our last post discussed the tax benefits of starting an S Corporation. It is important to recognize that using an “S Corp” can save you a substantial amount of money in employment taxes. In this article we will tackle an important topic – the need to maintain your corporate protection after your business is up and running. Failing to do so can result in your facing personal liability for actions of your company. If you have questions about your ongoing requirements, and wish to ensure that they are met, then it is suggested that you contact a Santa Ana business law attorney as soon as possible.
Orange County businesses can lose their corporate protection if they fail to follow necessary formalities
One the largest benefits of forming a business entity is that it can shield you from personal liability. If you own a corporation, an LLC, or an S Corp, then generally you cannot be sued personally for breached contracts, bad loans, or injuries caused by your company. These protections are known as the “corporate veil.” Those who wish to file a lawsuit will often not be able to pierce this veil and, in the event they win their legal case, they would only be able to garnish assets inside of the company; they would not be able to touch your personal assets. There are certain requirements which must be met in order for you to maintain such protection.
California business entities are required to follow certain formalities in order to maintain their corporate protections. There are certain filings which must be made with the Secretary of State on an annual basis. If these filings are not maintained then the company will lose corporate protection during the time in which they are out of date. If, for example, a company has a filing due on January 1st and the filing is not made until January 15th, then the owner of the company can be held personally liable for acts of the business which occur between January 1st and January 14th. Orange County businesses must stay up to date on their requirements in order to avoid such issues.
Orange County businesses can ensure that they maintain corporate protection by retaining a Santa Ana attorney
An entrepreneur begins a company because they love what is that they do. A chef may begin a restaurant because he or she loves to cook. A baker may open a bakery out of passion for designing elegant pastries. When you have chosen to chase your passion by starting a company it is easy to focus on what it is you care about rather than the technicalities of owning a business. Failing to pay attention to those technicalities can have serious consequences. Santa Ana businesses can ensure that they meet all necessary legal requirements, and maintain corporate protection, by retaining a business law lawyer to assist with their ongoing needs. This can allow an owner to focus on the most important thing – their business. Contact us today if you require assistance with such issues.
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