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Almost all new small businesses are set up as LLC's, S Corps, or C Corps. These legal entities provide a business owner protection by creating a "Corporate Veil". According to the Business Dictionary , the corporate veil is “a legal concept that separates the personality of a corporation from the personalities of its shareholders, and protects them from being personally liable for the company’s debts and other obligations. This protection is not ironclad or impenetrable.” This veil is great protection for a new business owner but as the definition says "this protection is not ironclad or impenetrable. When a business owner loses this protection, it is called "Piercing the Corporate Veil". This loss of protection stems from certain actions a business owner may take . Two of those actions are:
A business owner can legally take money out of their business, but it must be done according to established practices. For example, never pay your mortgage and personal car payment from your business accounts. Instead, write yourself a check or transfer money into your PERSONAL account, and pay your mortgage and personal car payment from there. In summary, keep your company and personal finances separate to avoid many potential problems. Its just common sense. Thank you, Robert Flynn The Service Business Bookkeeper, LLC *This article is intended to provide insight on how business books should be kept. I am not an attorney, and this post is not in any way legal advice. * Thanks to Nolo.com and startgrowmanagae.com for providing great content on this subject. Portions of this blog are a direct copy and paste from their websites. https://www.nolo.com/legal-encyclopedia/personal-liability-piercing-corporate-veil-33006.html https://startgrowmanage.com/how-to-withdraw-from-business-personal-use/
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 On occasion and when time permits, I enjoy getting out in the field with our local clients to see them in action and get a close up look at how their business operates.
Our most recent field trip involved seeing GS Mechanical* install a high efficiency tankless boiler and hot water combination for a grateful homeowner. GS Mechanical, led by owner George Stracuzzi, is quickly developing a solid reputation in South Jersey as a company that delivers outstanding value and service. I feel strongly that seeing a client we service in action helps us better serve them. Only good things can come from understanding a business and learning as much as you can about their industry. I am grateful every time I'm afforded this opportunity. Congratulations to George and his staff on another job well done. We are honored to handle their bookkeeping needs and help facilitate their growth. Thank you, Robert Flynn The Service Business Bookkeeper, LLC * The Service Business Bookeeper, LLC adheres to strict internal confidentiality rules regarding their clients. This post was given full consent by GS Mechanical prior to publication. |
AuthorRobert Flynn, Co-Founder of the Service Business Bookkeeper. "I try to find and share subects and articles that are of value to our clients and all service business owners." Archives
February 2023
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