Jeff On Call: How Will Incorporating My Business Protect My Assets?

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Q: How will incorporating my business protect my assets?

While the person claiming money or some other relief will undoubtedly name you personally, a corporation offers an additional layer of protection by virtue of its separate legal entity status under the law. Legally it is a separate person for liability purposes. Not necessarily the only person, though.

You’ll pay initial legal fees and recurring accounting fees. You must comply with certain state meeting and recordkeeping requirements. You’ll also pay additional corporate taxes.

Unlike a simple sole proprietorship or general partnership that merely requires a fictitious business name filing with the local county recorder’s office, corporations are more complicated.

However if you take your corporation seriously, a court will too.

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This means:

  • Fully and completely finishing the entire incorporation process. Filing the articles of incorporation, preparing by-laws and first meeting minutes, issuing stock certificates, opening a separate bank account, and completing any federal, state, and local requirements.
  • Maintaining the books and records required by federal and state agencies.
  • Filing all official reports required by federal, state, and local agencies.
  • Filing all federal and state corporate and personal tax returns, being certain they are consistent.
  • Keeping corporate activities financially and operationally separate from personal activities.

Of course, consult with your attorney and accountant before incorporating.

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To participate in future Q&As, email jeff@placementlaw.com. Keep in mind you should always consult with your own attorney. Nothing contained herein should be construed as legal advice. It is for your information only.

More than thirty-five years ago, Jeffrey G. Allen, J.D., C.P.C. turned a decade of recruiting and human resources management into the legal specialty of placement law. Since 1975, Jeff has collected more placement fees, litigated more trade secrets cases, and assisted more placement practitioners than anyone else. From individuals to multinational corporations in every phase of staffing, his name is synonymous with competent legal representation. Jeff holds four certifications in placement and is the author of 24 popular books in the career field, including bestsellers How to Turn an Interview into a Job, The Complete Q&A Job Interview Book and the revolutionary Instant Interviews. As the world?s leading placement lawyer, Jeff?s experience includes: Thirty-five years of law practice specializing in representation of staffing businesses and practitioners; Author of ?The Allen Law?--the only placement information trade secrets law in the United States; Expert witness on employment and placement matters; Recruiter and staffing service office manager; Human resources manager for major employers; Certified Personnel Consultant, Certified Placement Counselor, Certified Employment Specialist and Certified Search Specialist designations; Cofounder of the national Certified Search Specialist program; Special Advisor to the American Employment Association; General Counsel to the California Association of Personnel Consultants (honorary lifetime membership conferred); Founder and Director of the National Placement Law Center; Recipient of the Staffing Industry Lifetime Achievement Award; Advisor to national, regional and state trade associations on legal, ethics and legislative matters; Author of The Placement Strategy Handbook, Placement Management, The National Placement Law Center Fee Collection Guide and The Best of Jeff Allen, published by Search Research Institute exclusively for the staffing industry; and Producer of the EMPLAW Audio Series on employment law matters. Email him at jeff@placementlaw.com.

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