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How to Establish and Maintain the Corporate Shield of Protection
Many small business owners set up their business under the umbrella of a corporation or limited liability company to protect their personal property from risk or exposure. However there are some things that must be done to maintain this shield of protection in using such entities. |
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Proper Formation
First of all the corporation must be formed or established properly. You must first prepare a set of Articles of Incorporation and file these Articles with the Arkansas Secretary of State's office and pay the filing fee. Then you must prepare a proper set of By-Laws for the corporation or Operating Agreement for the LLC which state how the entity will be operated. You will then need to prepare the initial minutes of the corporation or LLC setting forth the new stockholders or shareholders for a corporation or Members for a LLC. The minutes also need to say who the officers of the entity will be for the coming year and who has authority to do certain things like setting up bank accounts.
Separate Bank Account
Secondly, the officers of the corporation or LLC must maintain the independence of the entity. A separate bank account must be established for the new entity and all receipts for the entity must be deposited in that account (there should never be a comingling of funds in a personal account). Also when signing any document for the corporation or LLC the name of the entity must appear and below it should be the signature line with your name and title appearing. Therefore you are telling the world that you are signing as a representative of the company and not individually.
Good Standing
Finally, you must keep the corporation or LLC in "Good Standing" with the state of Arkansas. This means that you are to pay the annual Franchise Tax (currently $150) to the Arkansas Secretary of State by May 1 of each year. If you do this on time you will stay in Good Standing and a valid corporation or LLC. However if you do not do this, the entity will be "Revoked" and it will no longer be a valid entity and the shareholders or Members will not have the corporate shield of protection.
We can perform all of these tasks and steps for you to establish and maintain your corporation or LLC in the proper manner and to keep it in "Good Standing." Just give us a call.
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