The quintessential lawyer answer: it depends.  Just having a Certificate of Formation doesn’t protect you forever. Do you also have a Company Agreement (also called an Operating Agreement)? Is it the right kind for your business?  There are a number of ways for a disgruntled customer/competitor, etc. to “pierce the corporate veil” and put your personal assets at risk. The best way to protect yourself is to make sure you are “doing the things that companies do,” like preparing annual meeting minutes every year, filing your Public Information Report, and your Report of No Tax Due by May 15^th, and getting business insurance. If you get sued, the first thing the plaintiff’s lawyer will ask for is your corporate book. If you don’t do these things, the lawyer can say you forfeited the protections of having a business entity. Give us a call if you would like for us to go over your corporate documents and see if there are potential holes in your armor.

A very common misconception is that an “S-Corp” is a type of business entity.  It’s not.  It is a designation under the Internal Revenue Code and affects the tax treatment the business received.  An LLC is a type of business entity recognized by the State of Texas (or wherever) that provides liability protection for business owners, among other things.  In fact, an LLC can be a Subchapter S corporation.  This is one of the reasons we at the Jacobson Law Firm are so adamant that our business clients let us communicate with their CPAs (and financial planners, and insurance agents, etc.): each professional has a different function, but working together, we make a team that better protects you and your business. Give us a call [contact info] if you would like to talk about what this team concept looks like.

• The main reason a business entity’s charter is forfeited is as a result of not filing the required reports (Public Information Report and your Report of No Tax Due) in time (May 15^th of each year, not including COVID years).  There’s really not much excuse for not doing this, since they send you a reminder every year, AND they send you a “We really mean it, file the report” letter after that.  Not to worry!  By filing the delinquent reports and paying a small fee, your company can be revived, but only for three years after the forfeiture.  If you’re in this position, contact us  and we’ll help you get your business back up and running.

• Okay, first take three breaths and hold for a count of 4.  Now, call your business insurance company and report the lawsuit. They will assign you insurance defense counsel.  If you don’t have business insurance (or even if you do), give us a call and we can walk you through what happens next. There are too many facets for a complete answer in these FAQs.

Yes, we can.  However, we will have a conversation about what happens when the two of you CAN’T agree on something that’s a deal-breaker.  Somebody has to be the final decisionmaker.  There are provisions we can put in your company agreement that deal with how to break a tie.  Give us a call to set up a conversation. There’s no substitute for starting out with the right documents and protections.