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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