What is the corporate veil?
The corporate veil is the term used to describe the separation of personal and business assets that occurs when a business is formally incorporated. This is not an automatic protection however, and business owners must make sure they meet all legal requirements to avoid having the corporate veil pierced.
What are the requirements?
A corporation must make sure they maintain a clear separation between all personal assets and business assets including credit cards, bank accounts and loans. Additionally, corporations are required to maintain documented records of required annual meetings and changes in ownership or by-laws.
LLC's have fewer requirements but also must meet any and all annual filing requirements with the state. It is important to make sure you are meeting all statutory requirements - failure to do so can void liability protection that incorporating provides and leave your personal assets vulnerable to satisfy business debts.
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