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WHAT IS THE CORPORATE VEIL?
The corporate veil is simply the
"separateness" of the company from your personal life, and personal affairs.
If this is compromised, then an opponent may argue
that you, as the owner of the company, should be personally liable for the
debts of the company. Maintaining the corporate veil will protect your
personal assets from the liabilities of the business.
Corporations and LLC's offer limited
liability as a benefit by incorporating. Maintaining the corporate
veil strengthens the limited liability of the company and protects your
personal assets. Ignoring company resolutions and the corporate veil
will weaken it, and expose you to the liabilities of the corporation or LLC.
WHY ARE COMPANY RESOLUTIONS IMPORTANT FOR
Resolutions chronicle the actions of the
company and explain what was done. It is part of the
internal record keeping measures to keep the company separate from your
personal affairs. It demonstrates the intent and practice that the
affairs of the company are not your personal affairs. This is
important because if your personal business and that of the business
operations are commingled, it will appear that there's no boundary between
the you and the company. If this happens, an opponent may attack the corporate veil of
In Wyoming, they must prove an intent to
commit fraud to attack the corporate veil. In weaker states where
taxes are typically high, such as in California, New York, New Jersey,
Michigan, and others, someone needs to show that the formalities were
ignored. A weak corporate veil means weak liability protection.
A strong corporate veil out of Wyoming means that you're secure in the
limited liability, offered by the corporate entity, even if you were lax in
the preparation of the corporate resolutions and the bylaws.
HOW DO I PREPARE AND RECORD COMPANY
RESOLUTIONS FOR MY BUSINESS?
The answer is surprisingly simple and easy.
The less complicated the practice, the more likely you'll complete the
Obtain a cheap three ring notebook from a
local office supply store, if you need to catch up on the resolutions.
If this is a new business, then obtain a spiral notebook. Think of
this as a diary of the business.
Enter the date what the business resolves
to do, then sign your name and title.
07/15/2009 The company resolves to
acquire a delivery vehicle and spend no more then $7,000. -Don Juan,
08/22/09 The company resolves to
start a new website on recipes using the company's products. -
Suzanne Mango, Secretary
09/28/09 The company resolves to open
a new bank account with Wells Fargo bank and to accept credit cards.
-Jeff Krame, VP
You may phrase it any way you would like.
It doesn't need to read in a corporate, formal, or legalese manner.
Just place it in your own words and keep those records.
WHAT OTHER MEASURES CAN I TAKE TO
PROTECT THE CORPORATE VEIL?
If you have a corporation or LLC from a
state with a weak corporate veil (California), don't commingle the company expenses and
your personal expenses and pay them from the same business account.
Your business should pay you a check, then deposit that check into your
personal account. From your personal account, pay personal expenses.Any commingling of expenses or activity
between your personal life and the company may impact the corporate veil.
If you spend most of your time working and
it's business related, then document those business expenses thoroughly.
If you have a Wyoming corporation or Wyoming
LLC, just don't commit fraud. The corporate veil will not protect you
when committing an act of fraud using a Wyoming corporation or Wyoming LLC.
Please call 307.237.2580 if you have any
All of our shelf companies
are filed in-house and maintained in-house. Thank you.