Annual Corporate Maintenance
As the end of the year fast approaches, our thoughts turn to holiday cheer and family fun! However, it is also important to think about a few simple pieces of annual corporate maintenance to protect you and your company. Two important and often overlooked items include filing the annual registration for your company and holding your annual meetings.
If you do not timely file annual registrations, you run the risk that the Secretary of State may administratively dissolve your entity. More importantly, if you do not follow proper corporate formalities, such as holding annual meetings, keeping accurate minutes and updating other corporate records, you subject your personal assets to potential liability through corporate veil piercing. The veil of a company’s separate existence is pierced and the owners exposed to personal liability when a court determines a debt is not really a debt of the company, but ought, in fairness, to be viewed as a debt of the owner. While there are many factors for piercing the corporate veil, failure to follow corporate formalities is a typical factor.
Annual corporate maintenance is certainly something you can do on your own, if you like. Alternatively, you can engage your corporate attorney to assist. It should not cost a fortune — in fact, I typically offer a flat fee annual maintenance package. Whether you do it yourself or engage an attorney, I suggest you spend a few minutes thinking about annual corporate maintenance before the year ends. It is also a good opportunity to do a general check-in with your corporate counsel on other business and legal matters. You will then be ready to ring in the new year!
December 15th, 2009 at 5:57 AM
I read your blog regularly. Quite good stuff. Happy holidays!