What are the corporate formalities?
Corporate formalities are important so that your corporation offers the most in liability protection. The primary reason to form a corporation is to separate your personal and business lives. In doing so, the corporation must be properly formed, operated and managed to maximize the protection. There are a number of “do’s and dont’s” where this comes into play. An example is commingling personal and business funds. When this occurs, should the corporation be challenged by a court, it could be found that the operations of the business were run so closely with personal affairs that the corporate shield could be disregarded. These types of formalities include taxes, property and its use, reporting and management. Other types of operating formalities include those mandated by state and federal law. Those are: • Corporate Record Keeping: By law, all 50 states require that the shareholders of a corporation hold a meeting at least on an annual basis, and one during the organization, or forming
