More Business Advice
More Business Advice
You’ve worked hard to grow your California business: you work hard to provide good customer service and make your efforts stand out from the crowd. And with all your hard work, you have many happy customers and employees. As with any growing, successful business, you will run into problems (or problem people). And sometimes, these customers or employees may be intent on hurting you personally—in your personal assets.
Do you have precious personal assets that you want to protect? If so, protecting yourself and your assets could be hidden in plain sight: your corporate records.
Although the above scenario may sound scary, if you use a corporate records service in California, you’ll know your business has protection legally drafted into it. Successful businesses have found maintaining their corporate records one of the best ways to protect themselves from piercing their corporate veil.
Yes, I want to work with Incorporation Attorney…
What are corporate books and records and why are they important?
Corporate books and records are essentially legal documentation of your business. This includes financial documentation, but also meeting minutes, membership within the company, etc. It helps enforce the protection of your personal assets by solidifying the corporate veil. Incorporating to form a legal business is one form of documentation that, if the details are completed accurately, can protect your liability.
It Is Not Just a Good Idea, It Is the California Law
Corporate records aren’t just documentation that is good to have. In California, there are laws and regulations around how corporations are formed and what documentation they need to remain legal. The California Corporations Code 9510 mandates that each corporation shall keep in written form: (1) Minutes of the proceedings of its members, board, and committees of the board. (2) Adequate and correct books and records of account. (3) A record of its members giving their names and addresses and the class of membership held by each.
But I formed an LLC—doesn’t that automatically limit my personal liability?
But I formed an LLC—doesn’t that automatically limit my personal liability?One of the most important reasons business owners choose to operate their companies as corporations is to protect themselves against personal liability for business debts and court judgments. Most owners, who incorporate, believe that their homes, bank accounts, and other personal assets are safe: in practice, however, Inc. does not confer automatic protection.
If the principles do not incorporate properly or if they co-mingle business and personal assets, they risk personal exposure. Many entrepreneurs think attending to the details of maintaining a proper corporate structure is a waste of time. It isn’t.
How common is it for the court to “pierce the corporate veil”?
“The percentage of cases in which courts “pierced the veil” varies depending on which state law is being applied. Among the eight states with the most piercing decisions, the percentage of cases in which courts pierced ranged from 45% in California to 31% in Pennsylvania.” –Robert Thompson, Professor of Law, Washington University.
What Happens if You Don’t Have a Corporate Records Service? How Does It Create Liability for My California Business?
Carelessness about records such as minutes of director and shareholder meetings leads courts to treat the corporation as the “alter ego” of the owner or owners, meaning there is an insufficient separation between the owner and the company. Hence, owners can be liable for corporate debts. Avoiding “alter ego” liability is easy: Prepare minutes of annual shareholder and board of director meetings, issue stock, don’t commingle funds, and do not use the corporate assets for personal obligations. Paying attention to the rules does count when it comes to maintaining the corporate shield against personal liability.
How do I know if I even need help?
The reality is you won’t know how much (if any) help your corporate records need until you have a legal expert review them. The best part about working with Incorporation Attorney is that we can ensure both your formation and corporate records are complete and accurate, but we’re also fair. If we find your corporate records are perfect, you won’t owe us a thing.
So, if you are thinking “I don’t know if there are even any problems with my corporate records”, have us take a look! We can provide you with the peace of mind you are looking for.
Simple Questions You Can Ask Yourself to Start
Understanding Your Vulnerability
Although there are quite a few complexities in maintaining complete and accurate corporate records, we’ve put together some questions you can ask yourself to help think about your vulnerability
If you answer NO, NO, YES, NO, you are very vulnerable.
A Corporate Record Service from a California Small Business Attorney Expert: Protection Is in the Paperwork
Are you comfortable that your business’ records would protect your personal assets in a lawsuit? Are you certain that everything is accurate and complete within your existing business? Why would you take the risk and wait until a lawsuit happens, when you can find out from a local business attorney who specializes in corporate records and incorporation services?
How our Corporate Records Service Works for Your California Business
Working with a qualified lawyer to review or update your corporate records is a smart move to solidifying your protection from personal liability within your business. So, what should you expect during the process? Let’s walk through the steps you can expect.
Step 1: The Initial Meeting to Determine What You Need in Your Corporate Records
We will schedule a meeting to which you will bring your corporate records. The current condition of the records is not important. During the consultation, we will take the opportunity to ask you questions about your company so that we can determine what is missing from your corporate records.
Step 3: We Put the Protection in Your Documents and Become Your Ally
When we work on your corporate records, we take a personal interest in our clients and their businesses. When you sign on to have your records maintained by our skilled professionals, you are not just gaining an attorney, but an ally who is interested in helping you get the most out of your business.
With us, your corporate records will be flawlessly maintained and legally valid — that’s our promise. You will also be secure in the knowledge that should any other legal issues arise, you have someone with a face and a heart to stand by you and help you when you may need it the most.
Your satisfaction is guaranteed. Our no-hassle program is here to help you become and stay compliant with State laws, greatly reducing your risk of running into legal trouble with your business. We will also help you create, print and archive required records and documents and assist you in accurately maintaining and organizing your record books so you always have access to what you need.
Step 2: Revealing the Status of Your Corporate Records
At the end of our meeting, we will have determined one of two things. Either, your records are in perfect condition and there is nothing more that you need to do, in which case, our meeting is over and you owe us nothing. Or, we will have determined that your records require work and that you wish to participate in our annual maintenance program.
In the case where work is necessary, we will give you a budget to bring the records current and a second budget for the cost of the annual maintenance program itself. If you decide that our program is not a good fit for your company or that you cannot afford it, there is no further obligation and our meeting is concluded. If you decide that the program is a good fit, then we get started right away.
Step 4: Annual Reminders to Maintain the Legal Protection
Finally, to make sure you do not have to deal with the hassle of late fees or other State roadblocks, we schedule and remind you of required meetings, activities, and filing deadlines. By entrusting your records to us, you can be sure you and your business are covered from a legal point of view.
Is This the Right Service for Me? Frequently Asked Questions
About Our Corporate Records Program
Every corporation that legally wants to keep up that protection, needs to maintain its corporate records. Below, we address a few frequently asked questions about corporate record services in California.
Small, Family-Owned Businesses: Does Your Size Affect Corporate Records?
Small, Family-Owned Businesses: Does Your Size Affect Corporate Records?Yes. There are no exceptions in the law for small, family-owned businesses. If you want the benefits a corporation offers, you must meet the same requirements as every other corporation including the big guys. No “small business” exceptions for the little guy.
I am worried it has been too long and I might be too far behind on my corporate records?
I am worried it has been too long and I might be too far behind on my corporate records?The best time to start catching up is now: the sooner, the better! Preparing the corporate records is like buying insurance. If the insurance is put into place before the problems occur, you have coverage. If you wait until your corporation is under siege, you could be in big trouble.
If you are behind on your corporate records, you will want to catch up as soon as possible before you are involved in any lawsuits or legal action against your corporation.
I am just a small business. Corporate lawyers are for the big guys. How does my business fit in with your client base?
If you’re a small to medium-sized business, you’re probably a candidate for our services. The base demographic of our clients are:
- 1-3 owners
- 0 to 50 employees
- Earning between $50,000 – $1,000,000 per year
Many of our clients have grown their businesses beyond that average, while some choose to remain at a size manageable for the family.
Don’t you all use a “boilerplate form,” and so can’t I just get one from the Internet?
You have to ask yourself some revealing questions and answer them truthfully: Who created the forms? When were they last updated? Are you using the correct forms? Do I have a complete set? When you run into problems, are you satisfied with technical support from who knows where? Attorneys whose practices specialize in counseling corporations can charge upwards of $450 per hour to advise clients and prepare corporate documents for their business affairs. Why would any business even consider such a thing when a form can be bought from an online legal stationery store? Need a hint? Here is the warning that appears with the standard Internet order: The forms are Bylaws, Minutes, Shareholders Agreement(s),
You have to ask yourself some revealing questions and answer them truthfully: Who created the forms? When were they last updated? Are you using the correct forms? Do I have a complete set? When you run into problems, are you satisfied with technical support from who knows where? Attorneys whose practices specialize in counseling corporations can charge upwards of $450 per hour to advise clients and prepare corporate documents for their business affairs. Why would any business even consider such a thing when a form can be bought from an online legal stationery store? Need a hint? Here is the warning that appears with the standard Internet order: The forms are Bylaws, Minutes, Shareholders Agreement(s),
I understand I need to work on this, and money isn’t an issue, but I am too busy running my business to leave the office and take care of this. What can I do?
The key to the process is for us to audit the original documents. We always recommend a personal conference. However, due to distance or time constraints, many clients accept our offer to send a UPS driver to pick up the records.
How this works:
You pack up the records.
UPS picks them up and delivers them to us. The records are tracked by us every step of the way.
Once we have audited the records, we have a teleconference with you to discuss the results and the next steps.
Get Help with Your Corporate Records
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