How to Protect Limited Liability?

So you filed the state requirements to start your own company. Therefore, now you have obtained limited liability and can shield yourself personally from any obligations that may transpire in the course of your business. Wrong! In fact, filing with the state is merely the first step to obtain limited liability.

You may be asking yourself, so how can I maintain the full protections of limited liability? Well, achieving the full protections of limited liability require your company to 1) follow the corporate formalities, 2) preserve the separate identity of your company, and 3) not engage in illegal or illicit behavior.

Complying with corporate formalities include 1) paying the initial fee to the Florida Secretary of State, and then filing an annual report with the appropriate fee every year. In addition, the board of directors, at the very least, must hold an annual meeting. The minutes from the meeting should be recorded and kept inside the company book. Moreover, the company should adopt an operating agreement or bylaws, which will depend on whether your company is an LLC or a Corporation, and these should also be kept inside the company book.

To preserve the separate identity of your company, you need to treat your company as a separate entity. In other words, your company must maintain separate bank accounts, and pay its bills out of separate accounts (separate from you and from your other companies). Also, your company should keep accounting and bookkeeping records and pay your taxes on time.

It is important that your business does not engage in illegal or illicit behavior. For the obvious reasons, if your company is used for the purpose of breaking the law or committing fraud, it is unlikely that your company will be able to maintain the protections of limited liability.

EPGD Business Law is located in beautiful Coral Gables, West Palm Beach and historic Washington D.C. Call us at (786) 837-6787, or contact us through the website to schedule a consultation.

*Disclaimer: this blog post is not intended to be legal advice. We highly recommend speaking to an attorney if you have any legal concerns. Contacting us through our website does not establish an attorney-client relationship.*

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Eric Gros-Dubois

Eric P. Gros-Dubois founded EPGD Business Law in 2013 and is the current head of the firm’s corporate, estate planning, and tax practice, and manages the firm’s Washington D.C. office. With a JD and MBA, and a specialization in finance, Eric is able to step back and view the legal world through a commercial lens while also acting as a trusted business advisor for his clients. He does his best to be solutions oriented, and tries to think like a business owner, not just a lawyer.


*The following comments are not intended to be treated as legal advice. The answer to your question is limited to the basic facts presented. Additional details may heavily alter our assessment and change the answer provided. For a more thorough review of your question please contact our office for a consultation.



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