Creditors often want to “pierce the corporate veil” to hold shareholders accountable for corporate debt. The following provides a basic overview of the steps shareholders of corporations can take to minimize the risk that they can be held responsible for corporate debts. This will protect their personal assets from being seized by creditors to satisfy corporate debt.
It is imperative that money and/or assets are contributed to adequately capitalize the operations of the corporation.
It is imperative that a separate bank account with a employer identification number (EIN) be employed by the corporation. Only corporate expenses should be paid from such accounts. No personal expenses should be paid with corporate assets. No commingling of corporate assets with personal assets should occur at any time. If money is loaned to the corporation by shareholders such loan should be fully documented and authorized, recorded and ratified in the minutes of the corporation. The same steps should be effectuated for loans to shareholders by the corporation.
Separate accounting records need to be kept and documentation must be retained and preserved for the corporation. All corporate tax returns must be filed regularly and on a timely basis at the federal, state and local level.
It is imperative that regular and/or annual minutes of the board of directors and shareholders be held and that written minutes memorialize, ratify, and confirm such events and actions taken by the directors and officers of the corporation. Any related party transactions such as shareholder loans to the corporation or loans from the corporation to the shareholder must be documented and detailed in the minutes. Any tax elections or inter-company loans between affiliates must be documented. In addition, any significant actions taken by corporate officers should be documented with contracts and inserted into the minutes.
For individual liability for corporate taxes please read Personal Liability For Corporate Employment Taxes
This is just an overview and not nearly an all inclusive list as to the steps involved in good corporate housekeeping for the protection against creditor actions to pierce the corporate veil.
If your corporate minute book is just sitting on a shelf and never been updated you are looking for trouble. If you think that if you can just document your corporate activity and “back date” minutes think again. Litigation lawyers are wise to this game and when a law suit arises it will be too late. So get going with regular or at least annual minutes to protect your personal wealth. The cost is a lot cheaper than losing a lawsuit and being held personally responsible for corporate debt.
Contact our office if you want to get compliant in this very important matter and you want to protect your personal liability exposure and wealth.
Steve is an excellent corporate attorney who has a deep understanding of corporate law, taxes and estate planning. He’s been extremely helpful to me in keeping my many companies and business ventures organized, focused and squeaky clean. He’s very strong in estate planning and wealth preservation as well. Finally, his follow through is air tight and utterly dependable.” Top qualities: Personable, Expert, On Time.” Retained in 1994 and continuously thereafter.
Hiring Steven was quite possibly the best decision of my life! Steven took the time to hear every single one of my concerns and address them in an extremely clear, concise and thorough manner. He guided me through the notoriously complicated and stressful process of probate with the utmost of compassion and dedication. Thank you Steven!
I highly recommend Steven J. Fromm for all your estate and tax planning needs. He has the most complete and thorough knowledge of current as well as pending federal, state, and local tax codes of any professional that I have ever been involved with. His ability to totally sort out your current financial condition and relate it to a plan to minimize your tax liability and allow you to sleep at night is without equal. He is professional, timely, creative, and an advocate for your needs, whether its personal or business. You can be assured that you will be well taken care of, with cutting edge/ sound financial and tax advice by Steven J. Fromm.
I have always found Steve to be very responsive, accurate and creative in legal matters presented to him. He demonstrates a good business sense. We have collaborated on several highly technical issues over the years. I look forward to our continuing relationship.
Steven has been instrumental in helping my partner and I to create a secure and satisfying estate plan, which meets or exceeds all of our wishes and contains contingencies for everything from medical issues to wealth management and living wills. In this process, Steven has also become a friend. If you need Estate Planning, Tax Advice, a Will or a trust, etc., we highly recommend Steven Fromm, Esquire. He will listen and be sensitive to your unique situation.
Steve is an excellent attorney who has provided help for my family personally for business, tax, and other services for many years. He is extremely knowledgeable and thorough, and is extremely good at explaining legal concepts to me in clear terms understandable to a non-attorney. It is difficult to pick only three attributes above, since Steve’s work meets most if not all of the attributes above.
Steve is an excellent corporate attorney who has a deep understanding of corporate law, taxes and estate planning. He’s been extremely helpful to me in keeping my many companies and business ventures organized, focused and squeaky clean. He’s very strong in estate planning and wealth preservation as well. Finally, his follow through is air tight and utterly dependable.
Steven is a trusted adviser. We depend on him for so many things. He is patient, listens to our needs and makes excellent suggestions. He is extremely talented. We value his advice and have recommended him unhesitatingly to friends and family.
Steve Fromm is a superb lawyer and I highly recommend him! After a terrible experience with a previous lawyer concerning an estate administration, I entered his office feeling very deflated, confused and discouraged. However, I left his office feeling enthusiastic and eager to get down to business. My situation was very unique, I needed his expertise for an array of things and Steve was able to address all of my needs. With a limited timeframe and an extreme amount of obstacles to overcome he worked meticulously, diligently and accomplished extraordinary results. His professionalism is incomparable and I am forever grateful.
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From their offices in Philadelphia, PA, the law firm of Steven J. Fromm & Associates, P.C. provides a full range of estate planning, probate and estate administration, tax, business and corporate legal services to clients throughout eastern Pennsylvania and the Delaware Valley, the Lehigh Valley Area, the Five-County Area, Bucks County, Delaware County, Montgomery County, Chester County, Philadelphia County, Berks County, Lehigh County, Lancaster County, York County, Harrisburg, Norristown, Doylestown, Media, West Chester, Allentown, Lancaster, and Reading.