Keep your business records up to date!

A common problem we see when meeting with new business clients is that their corporate or company records are not up to date.  Setting up a corporation or LLC is not the end of the story.  Corporations must hold annual meetings of shareholders and directors, and major activities or decisions should be documented by resolutions or minutes of a special meeting.  Although limited liability companies do not have to hold annual meetings, LLCs should likewise document major decisions.  We often see entity records that have been neglected for years and don't even reflect the current ownership structure of the entity.  Why is this so important?  There are several reasons but possibly the most important is liability protection.  One way to pierce the corporate/company veil and tag shareholders or members with personal liability is to show that an entity was operated as the alter ego of the shareholders/members rather than as a separate entity.  Don't lose your protection from personal liability by failing to keep accurate and current records.