Corporate Formality Maintenance

One of the primary reasons business owners form corporations is to limit liability.  However these benefits only apply if you follow the rules.


A corporation must be managed properly—corporate formalities have to be followed in order to preserve limited liability; the corporate veil.  If an IRS audit reveals that you have not observed all of the formalities, they may claim the corporation is just an alter ego and disregard the corporation. This means that they could go after the corporation’s income and assets to satisfy personal tax liabilities. In addition, if you end up getting sued and the plaintiff’s attorney discovers you haven’t observed the corporate formalities, they can ask the court to “pierce the corporate veil” and hold you, the shareholder, personally responsible for the judgment.


Corporate formalities are not complicated and are fairly easy to maintain.  But, not doing so can cause you a lot more aggravation than spending the time and money to comply now.


Esquire Group will remind you of your annual meeting dates and provide you with the necessary documentation to maintain your corporate formalities.


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