How to Help Maintain Limited Liability After Incorporating in Pennsylvania STAFF PICK

Posted almost 5 years ago. Applies to Pennsylvania, 4 helpful votes

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1

Interact using the Corporation's Name

All interactions with any third parties such as customers or creditors should be done in the Corporation's name, and, where in writing, on Corporation letterhead.

2

Maintain Insurance

Maintain adequate insurance for the Corporation.

3

Use the Corporation's Full Legal Name

Any use of the Corporation's name should always include the entire legal name of the Corporation ("ABC Corporation Inc."), so that it is clear to third parties that they are dealing with a corporation and not the individual shareholders, directors, or officers. The Corporation's correspondence, contracts, business cards, marketing materials, websites, invoices, statements, tax returns, etc. should use the Corporation's full legal name to clearly indicate that it is a corporation.

4

Make it Clear the Corporation Owes the Money (not you individually)

All "accounts payable" (such as credit cards, telephone bills, utility bills, etc.) should be in the Corporation's name and show the Corporation as the debtor.

5

Use Officer Titles when you Sign Contracts

All Corporation agreements, correspondence, and writings in any form whatsoever should be entered into or signed by one or more officers as "President" of the Corporation (or as "Vice-President", "Treasurer", or whichever other officer's title is applicable). Always indicate a title so that it is clearer that you are not signing individually.

6

Keep Separate Bank Accounts & Don't Mingle Funds

Maintain a separate bank account in the name of the Corporation. Do not commingle corporate funds with the funds of shareholders or of a related company.

7

Maintain Records

Retain adequate financial and corporate records. This includes records that must be retained for tax return purposes and organizational records such as the Corporation's Articles of Incorporation, Bylaws, EIN (Employer Identification Number), Shareholders' Agreement, etc.

8

Observe Corporate Formalities

Observe the formalities of regular (or at least annual) meetings and of keeping written records such as minutes, developing written resolutions for corporate actions, as well as the policies and procedures established in the Articles of Incorporation, Bylaws, and Shareholders' Agreement. Do this even if the Corporation does not have numerous shareholders.

9

Use Caution with Guaranty and Surety Agreements

Remember - if you or any other person agrees to be a guarantor or surety of a contract or loan involving the Corporation, this entails undertaking personal liability for the Corporation's obligations. These are often found in loan agreements and commercial lease agreements.

Additional Resources

Could Your Business' Liabilities Become Your Personal Liabilties?

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