Piercing The Corporate Veil (LLC)
My question involves business law in the state of: KS
I'm about to form an LLC for my online business. Wanted to know if it could be considered piercing the corporate veil by using my home address as the address of the business.
It's no problem to obtain a PO Box, but I just wanted to see if I have anything to worry about.
Re: Piercing The Corporate Veil (LLC)
Piercing the corporate veil references an action taken by somebody suing you to argue that your business entity is a fiction (an alter ego for you), and should be disregarded by a court. There's no reason you cannot run a business from your home, and merely using your home address as the business address does not mean your corporation or LLC would be invalid. If you're that worried about being sued, consider an S corporation or C corporation as well (they're not necessarily better, but have a longer history of being tested in court) and get insurance for your business operations.
Re: Piercing The Corporate Veil (LLC)
Suggest you get the book "The Corporate Minutes Book" by Anthony Mancuso which you can purchase at:
http://www.amazon.com/Corporate-Minu.../dp/0873378199
I operate thru an "S Corp", "C Corp", as well as an LLC's for various reasons. While the LLC is the least formal, if you follow all the fomalities of a Corp, you'll stay out of trouble.
For instance, I use the "C Corp" to operate a management company to pay for personal benefits, such as medical, car mileage, going to Real Estate conventions etc.
What I did was:
- Wrote up a medical plan for the management, i.e. "me", and approved by the board, i.e. me and the wife, to either reimburse managment employees for medical insurance they pay, or make payments on their behalf.
- Wrote up a schedule of "management fees" due from rental property operations, including a fixed monthly fee, and hourly billing rates, and approved by the board.
- Wrote up a procedure for employee, i.e. "me" in obtaining reimbursement for expenses incurred.
- Always separate "personal finances" from "business finances". Keep separate accounts and books.
What is done on a day to day basis is:
- The management company invoices the rental enties for services rendered, monthly fees, and additional billings.
- Expense reports filed monthly detailing mileage, where I went to, purchases for the corp. thru personal credit cards, and checks issued against the expense reports. As many of these items are repetitive, I have spreadsheets done in the form of expense reports, and change the dates and amounts.
Both my S Corp, and C Corp is operated thru my home address, and as long as I follow all the formalities, I should be in the clear.
Dealings between myself and the corp are documented through the above procedures, with different bank accounts used. When the "corp" isses me a check, it is documented, the reason clearly stated. As I also used different banks for these purposes, I find I have to deposit my rent checks in one bank, issue myself a check per the management fee agreement and deposit the check at a second bank, then issue payments for my medical.
A word about using different banks. Yes, it's simpler to use one bank and move everything online. As my dad and granddad were business people, they drilled the idea in me of isolating my assets. If I have a problem with one bank, it would only affect one part of my businesses, and I can simply move on to another bank.
I'm told my granddad had several businesses during the Great Depression, lost most of them when the one bank he used couldn't extend any more credit. The bank was in trouble. Other people using various banks had more options and survived.