Now that you are incorporated and in the black it’s time to make sure you are well protected against liability. A California corporation can shield the business owner’s (shareholders) personal assets from the debts, liabilities and obligations of the corporation. Asset protection is one of the primary benefits to having a California Corporation, or LLC. Many do not realize that under the law, creditors are able to “pierce the corporate veil” of improperly maintained corporations, which allows creditors to attach owner’s personal assets (bank accounts, investments and home) to satisfy corporate liabilities. It is very important to incorporate and to adhere to all corporate formalities. In today’s litigious business environment one must protect their corporate and personal assets. Time and time again businesses get on a role, start making money and lose sight of their business obligations. It takes so much to build a business and with a few small slip-ups it can all be lost.
Piercing the Corporate Veil:
There are three legal mechanisms for piercing the veil: first, bad accounting (co-mingling of funds); second, failure to obey the corporate formalities; third, threading your corporate entity as an alter ego. Let Eric H. Milliken guide you away from the pitfalls many new businesses fall into.
Avoid employment related lawsuits by having well prepared employee agreements. It is essential to have binding employment contracts, offer letters, nondisclosure and proprietary rights agreements, employee manuals and policies, termination letters and severance pay agreements. In the event that a conflict does arise it will be necessary to have a trained attorney negotiate the settlement claim. By formulating and implementing comprehensive employee policies and procedures through the hiring process, you will minimize your exposure to liability.
Don’t fall into the independent contractor trap. Many new businesses want to expand and hire employees. However, they don’t want to pay the state and federal taxes. The solution seems simple: just call the new employee a Contractor! This can backfire. If you have a dispute with an employee who blows the whistle to the California State Labor Commissioner, the commissioner may determine your contractor is an employee. They can issue fines, but worst of all they will inform the Internal Revenue Services (IRS) of your tax evasion which could lead to an audit. Let Eric H. Milliken make an air tight employment contract. This will protect your rights and interest, and outline your new employee or contracts roles.
It does not take an attorney to tell you to get insurance. It’s a small price to pay for the peace of mind it will buy you.
A clear and readable contract protects business relationships by defining each party’s legal obligations. A contract is a legally binding agreement between two or more parties to do a legal act. People enter into contracts for many reasons. There are several factors to consider in order to determine whether a contract has been made and whether the terms are enforceable. If there has been a breach of the contract, there is a question of whether a party has incurred damages.
Although some contracts seem straightforward, this is not always the case. Some provisions in contracts require legal expertise to determine whether they are enforceable in California Courts.
A well written partnership agreement is essential to maintain a long-term productive business venture. It is very important to have all essential terms in writing before conducting business. Well-defined terms put each party on notice regarding their duties and responsibilities. The most essential element is to have the profit sharing agreement in writing before any profits are realized.
Liability is a dirty word. Let’s protect your company before a conflict arises! Let Eric H. Milliken give your company the proper guidance to prevent controversy and liability, and keep your company yours.