Business Setup – Compliance and Formalities 2016-11-05T12:06:18+00:00

Why are formalities important?

There is a common misconception that once a corporation is a setup you are personally protected from anything going on in the business, regardless of what ones does, from the point of incorporation. Generally, this statement is true if all the formalities are followed. What are formalities? Well, you must understand that while one may own a business, the business is a separate, distinct entity from the individual. The separation of the business from the owner is made evident when the name of the company appears on contracts, invoices, and notices but not the owner. Therefore, while an owner owns the company, the business belongs to the company and not the owner. These distinctions along with others establish a separation of the company and individual including the separation of liability (i.e., the liability of the company will remain with the company).

Keep in mind, the formalities are not only for corporations but also for limited liability companies (LLC’s). While LLC’s are partnerships, the limited liability protections emanate from their corporate characteristics. Therefore, formalities apply to LLC’s as well; however, in order to maintain the separation of liability, the owner must take steps to keep the company separate from him/her. The steps are known as the formalities. The formalities are actions that would take to show evidence of such separation. Classic examples include establishing a bank account just for the business & using the account solely for ordinary and necessary business transactions, having all corporate decisions documented and effectuated by resolutions, (if required) having sufficient insurance, and even capital investment.

Benefits of having an attorney set up your incorporation

  • Confirm compliance with the law.
  • Determine if other information such as non-required articles should be included in your articles of incorporation.
  • Can potentially avoid liability to the owners by having it drafted correctly.

How long does it take to have a custom Business Setup – Compliance and Formalities?

Approximately 1-2 business days*

*Depending on Specifications


Why our firm to make your custom Business Setup – Compliance and Formalities?

If an owner maintains company formalities, it is very likely those owners will have the limited liability protections they envisioned when they established the company. If the formalities are not being followed, the owners could find themselves personally liable for the actions of the company despite having set up a corporation. Not sure if you are following the corporate formalities? Would you like a review of your business? Contact SG Law Group. We will help determine if you as the owner are personally protected from the acts of your company.


Hire an affordable, professional Attorney to review if your business is Legally Compliant Today!