Dot your i's, cross your t's

Many of you, I know, use some form of "business association" to conduct business. That's a law school term for "corporation," "limited liability corporation," "professional association" and Florida's other recognized forms of partnership.

There are distinct benefits and reasons why you employ these fictitious entities as a means to conduct business. For most, the biggest reason is that an entity like a corporation acts as a shield between you and personal liability. Many, many, many times have I been confronted with clients and would be clients who believe that they are insulated from personal liability because they have set up a corporation.

News flash, kids. A corporation is only a shield against liability if: 1) you treat it as an entity separate from yourself; and 2) you keep up the corporate existence.

If you want to insulate yourself from personal responsibility for your corporate acts, you must treat the corporation as something other than an extension of yourself. You cannot, for instance, use the corporate bank account as your own to pay personal expenses. You cannot borrow money from your corporation on an interest free basis. In fact, there is a listing of those things that the law considers indicators that you and your corporate existence are not truly distinct from one another so there is no need to treat you separately. I will put this list together and publish it for you all tomorrow.

In addition to treating your fictitious entity as something other than an extension of yourself, you must maintain the corporation. Just like pets, plants and kids, you have to see to the corporation's well being or it will die. Every year, you have to complete the annual report to the Florida Secretary of State and send in your fee if you want your corporate existence to go on. Just because you set the corporation up doesn't mean it goes on indefinitely. The good news is, the State sends you the report to fill out and puts the deadline to send it back right on the report cover. It couldn't be easier. If you don't do this, the corporation lapses into "administrative dissolution" which isn't as bad as it used to be. You can still sue and be sued, but your corporate existence is in something of a limbo. All you have to do is pay a fee and you can reinstate the corporation.

And....you can check out your corporate status by going to www.subbiz.org. This is a great, free resource to check out. You can look up any corporation existing under Florida law, find out who the registered agent is, the principals, the business address, etc.