Maintaining Separation Between the Corporation and Yourself

When properly handled, a corporation is a legal “person”, separate, distinct and totally apart from you. The key to keeping things that way is to ensure that the corporation is indeed properly treated. The quickest way to lose the protection afforded by your corporate shelter is for you to treat it with disrespect.

One simple thing that many people fail to do on a regular basis—and which can tear down the walls of separation between themselves and a corporation—occurs when they sign documents in behalf of their “brainless child” (corporation). All it takes to do things right is to follow the signature with an indication that you are acting as an agent or officer of the corporation rather than in a personal capacity. If you are acting as a particular officer, as the vice president, for example—follow your signature with, “{Your Name}, Vice President” or “{Your Name}, VP”. In cases where you would rather not disclose any particular position held within the corporation you may sign as “{Your Name}, Agent”, which simply means that you are acting as an agent for the corporation and NOT in a personal capacity.

The above advice applies to ALL situations where you might sign for the corporation, including checks, of course, but also when signing such mundane things as invoices for goods received or services performed. And it certainly applies to any kind of agreement—a lease, purchase or rental agreement, for instance—as well as corporate resolutions. After a while you will find that you do this automatically and thus automatically uphold the fundamental protective insulation of your separateness from the corporate entity.

Failure to adhere to this basic corporate formality “could” allow a prospective litigant to assert that the corporation is nothing more than a “straw man” and that it actually functions only as your “alter ego”. We have put the word “could” in parentheses because in Nevada there actually exists only one case in the last quarter-century of which we are aware in which a prospective litigant managed to “pierce the corporate veil” and cause liability to be assessed against the corporation’s owner/manager—and that was a case of outright and unabashed fraud. It’s great to have that measure of protection but you can easily bolster it by developing the good habit of following your signature with a title.

The next essential step in maintaining separation between the corporation and yourself is to always document key decisions made for the corporation in the form of corporate resolutions. If you do not know how to construct a resolution, give us a call and we will be pleased to help out. Menawhile, if all you do is put a simple memo into the “resolutions” section of your corporate records, you will have taken a MAJOR step toward maintaining your Nevada corporation’s uneqaled liability protection.