Most business owners think that they’re safe from personal liability when they formed their corporation or LLC. This protection is called your “corporate veil.” For the most part, this is true… if you follow the rules.
If you don’t follow the rules of the club to keep you in the bubble of protection, a court can pierce your corporate veil. This leaves you as the owner, your shareholders, or members of your corporation or LLC personally liable for corporate debts. Once your protection is peeled back, creditors can go after your home, bank account, investments, and other assets to satisfy the corporate debt. It is very easy to open yourself up to this threat and leave you vulnerable to litigation that will not only target your business, but your personal assets. Business owners are being attacked by entities like the IRS and lawyers who lie in wait to catch your protection off guard.
What can you do as a business owner?
You need to follow the rules to keep your protection firmly in place. The asset protection and tax saving benefits are only guaranteed if your company follows specific rules of operation—known as Corporate and LLC compliance. These rules state that your company needs to “act” like a Corporation or LLC. Taking action such as consistently recording minutes and instituting resolutions are a few examples. Follow these defined rules and you have all the benefits that Corporations and LLC promise. Disregard these rules, and you could potentially lose everything.
Our very own Dr. Lisa Faast had a conversation about how pharmacy owners can protect themselves with Scott Burnett, a former trial lawyer who is considered to be one of the nation’s leading legal authorities on asset protection and tax education for corporations and LLC’s. Many of his cases involved peeling back the protection of corporation and LLC’s, and attacking the personal assets of the owners. He now teaches business owners how to avoid frivolous litigation, and over taxation.
Scary stuff, right?
Listen totheir short discussion to keep you on the right track below. Make sure to listen to the end for an incredible gift for you that will keep your veil in place and protect you from litigation.
The PDS Super-Conference is the pharmacy event of the year that is guaranteed to change the way you run your business. Join us for the next event in February! Click below for details.