Maintain Your LLC Corporate Structure to Avoid Lawsuits

Why file an LLC and manage a company if it’s going to get invalidated? Can’t a good litigation attorney just “pierce the corporate veil” of an LLC?

That advice is just wrong. LLCs are incredibly hard to pierce—if they are maintained correctly. The problem is that most business owners fail to do the things that are necessary to maintain the adequate corporate structure.

So what are the things that you need to keep in mind about how to structure real estate investment company?

First, you must maintain records and accounting of your company. How much money is coming in? What is the money that’s being spent? You need to run everything through a bank account for your company to maintain the appearance of being a legitimate, separate entity from yourself.

You can not treat the money of the company as it were your own piggy bank. This means if you ever need to take money out, you must keep an accounting of it as a dividend from the company.

If you fail to follow these steps, a corporation can get pierced. If the corporation is pierced it provides no protection.

However, if you are diligent in maintaining adequate records of the company you will be protected.

Scott Royal Smith is an asset protection attorney and long-time real estate investor. He's on a mission to help fellow investors free their time, protect their assets, and create lasting wealth.

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