Phoenix / Mesa Law Firm Urges Companies Not To Overlook Important Corporate Formalities

    PHOENIX / MESA, AZ, June 23, 2009 /24-7PressRelease/ -- For any company - big or small, failure to set up a proper business entity or to maintain corporate formalities are mistakes that can ultimately lead to serious, and sometimes disastrous, problems down the road.

"Avoiding these two mistakes is fundamental to the success of your business," says attorney Scott F. Gibson, founding partner of Gibson Ferrin & Riggs, PLC.

In his new e-book, "Ten Fatal Mistakes that Business Owners Make (And How to Avoid Them)," Gibson gives real-life examples that illustrate how these mistakes - and others - can prove fatal for any business and offers specific advice on how to prevent them. The free e-book is downloadable from the firm's website at www.gfrlaw.net/firmpublications.aspx.

"Starting your business is an exciting event," says Gibson, who has been practicing business law for more than 20 years. "So exciting, in fact, that many business owners fail to actually set up their business properly; unless you build upon a solid foundation, your business is likely to collapse."

Gibson explains that if a business owner is operating a company as a sole proprietorship or with another person as a general partnership, he or she will likely regret that decision someday.

"Do not neglect to properly set up and maintain the business as a corporation or a limited liability company," he cautions. "This protects you from liability arising from owning and operating a business. The law recognizes a corporation or limited liability company as a separate 'person' with separate finances, assets, and liabilities. Any company obligations remain at the company level, and your personal assets are protected."

Once the proper foundation is in place, then treat your business like a real business, he urges. "Real businesses operate with corporate formalities. No matter what size it is, your business is important. If you go to the time and effort to properly set up your business, be sure to take proper steps to maintain your corporate formalities."

These steps include opening separate bank accounts for your business; holding regular meetings of the shareholders, officers and directors; and updating corporate minutes each year.

"The bottom line is to keep business and personal finances separate," he says. "Maintaining the formalities is crucial in allowing you to protect yourself from personal liability."

"If you do not properly set up a formal business entity and maintain the separation of your business and personal interests, a court may find that you are personally liable for the obligations of the company," he adds.

Gibson points out that setting up a formal business entity does not only protect a business owner from personal liability, but that it also provides numerous other advantages.

"Formal business entities create wealth because the owners have something concrete (stock or membership interests) that they can sell," he says. "A formal business enterprise also enables the owners to bring in other owners by selling part of the business."

The attorneys at Gibson Ferrin & Riggs, PLC concentrate their practice on serving individuals, families and small business owners with business-related issues, family law and estate planning. They can help identify and assess the things that matter most to their clients and work to preserve, promote and protect them. Visit their website at www.gfrlegal.com and their blog at www.biziboom.com. The firm's expertise in commercial litigation and business, family and estate law is recognized throughout the Phoenix / Mesa area. Call attorney Scott Gibson at 480-633-8100 with any questions on business law or to schedule a confidential and comprehensive consultation.

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