From protecting personal assets to limiting business liability and risk, maintaining corporate status in Illinois is a key component of running a successful business. Once the corporate veil is pierced, unhappy clients or other businesses can reach past the protection that corporate status gives and attack personal resources. There are many well-documented cases where not incorporating a business puts a business owner’s family home, personal savings, and even retirement resources at risk. Maintaining the benefits and protection gained by corporate status is an ongoing process after incorporation. This process involves filing annual reports, paying an annual franchise tax, and paying state corporate taxes.
Incorporation and the process of maintaining corporate status can be complicated. There are many factors to consider from the outset, including which type of corporate structure to choose and whether to incorporate in or out of state . Each of these early decisions affects the process of maintaining corporate status. From tax rates to yearly fees, each type of corporation carries a different set of maintenance requirements. However, maintenance of corporate status requires more than payment of taxes and fees. Business owners and shareholders need to take care to avoid mixing personal and corporate resources. There is also a set of standards to follow in electing and maintaining a corporate board. At the very least, a yearly audit from a corporate lawyer is highly recommended. This will make certain that all of the processes are followed and required documents kept.
Documentation of all the corporate processes must be maintained, and a board of directors elected by the corporate shareholders. This board should regularly pass officially documented resolutions on key corporate decisions. If these include significant changes to a business’s records, these amendments must be filed with the Secretary of State. Investors and shareholders must be informed about changes in business operations and other corporate decisions. In addition, businesses that expand into other states then need to comply with processes for other states as well.
The entire process of maintaining corporate status can be confusing, and it is helpful to consult a corporate lawyer to ensure that the proper process is followed. An initial consultation can clear up any doubts about forming a corporation, and regular reviews afterwards will make sure that the business is in compliance. Doing so can mean the difference between holding a successful corporation and a dangerous liability.
