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Corporate New Year's Resolution: Maintaining Corporate Identity a Practice Checklist

Jan 06, 2014

2014 New Year’s Resolution

Maintaining Corporate Identity

Practice Checklist

 By: Craig Watrous

Maintaining corporate formalities is not difficult, but it does require periodic review and attention.  Even the most careful corporate advisors and shareholders can use a reminder on how to guard and maintain corporate identity.   Here is a general summary of important points for your business to be sure to address in 2014:

 

  1. Keep current on Annual Report filings with the Secretary of State where your corporation is incorporated.  In Colorado, this can all be done online.  Here is the link to the Colorado Secretary of State:  http://www.sos.state.co.us/pubs/business/businessHome.html?menuheaders=2
  2. Operate only under the registered corporate name or the corporation’s registered trade name.  If a trade name has not been registered, then it may not be valid.
  3. Make sure that third parties dealing with the business know that it is in fact a corporation. Make sure that all company agreements are entered into by the company and not personally guaranteed by the party signing those agreements. 
  4. If your company uses a trade name, maintain trade name filings with the relevant Secretary of State.
  5. Do not give personal guaranties or otherwise risk personal liability. Do not sign contracts personally, sign only as an officer on behalf of the company or you may be inadvertently signing personally and risk personal liability. 
  6. Keep all financial transactions involving the corporation separate from personal financial matters. Do not co-mingle your personal assets with company assets.
  7. Carry appropriate insurance for company vehicles, property, and company assets. Carry appropriate liability insurance for the company’s acts.
  8. Document any indebtedness owed to shareholders.  This should be documented in corporate minutes and filed in the corporate minute book.
  9. Document significant company capital transactions. This should be documented in corporate minutes and filed in the corporate minute book.
  10. Hold your annual meeting  and maintain at least annual corporate minutes confirming the board of directors, electing officers, and documenting major corporate transactions. 
  11. If a shareholder leases property to the company, make sure that the lease is in writing, commercially reasonable, and that the terms of the lease are actually followed. 

This is not designed to be a comprehensive list, but rather a quick reminder of some of the key issues and documentation you should be preparing and maintaining to protect the independent identity and legal status of your corporation.  Failing to establish and keep formalities in place can remove limited liability protection for the shareholders, making them potentially personally liable for company disputes.  In other words, your corporate veil may be pierced. If you have any questions or need any assistance with any of the above, please give us a call. 

 

(Mallon & Lonnquist, LLC, is a business, real estate, finance, and litigation law firm. Craig T. Watrous is a Colorado business attorney with Mallon & Lonnquist, based in Denver, Colorado. Craig regularly represents corporate clients, both C-corps and S-corps. Craig can be reached at cwatrous@mallon-lonnquist.com.)




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