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What should you know about corporate liability in Nebraska?

On Behalf of | Nov 21, 2019 | Business Formation |

If you’ve begun looking into setting up a small business, then you’ve likely found that there are many different ways for you to incorporate it here in Nebraska. Some of the more popular business formations that residents select are those that limit their owner’s liability for their company’s actions.

There are many ways that individuals can incorporate their business if they want to reduce their chance of having creditors claim their personal property and assets if something happens with their company.

Business owners can be held personally liable for a business’ debts if they injure someone, fail to deposit taxes that are withheld from their employees’ paychecks or commit any illegal or fraudulent act. A company owner may be held personally liable for their business doings if they put up their own money or property as collateral for a business debt then fail to pay it off. The same might occur if the owners co-mingle their own personal money with their company’s too.

A company owner can be held personally liable for their company’s actions if a judge finds that the “alter ego” theory applies. Any company that appears to be underfunded, that doesn’t hold regular director or shareholder meetings or doesn’t maintain adequate financial records separating personal and corporate finances may be classified as an alter-ego entity. Business owners of these types of entities may be held personally liable for their company’s actions.

Corporations can best retain their incorporation status by complying with the requirements expected of them. This includes holding regular directors and shareholders meetings, documenting the minutes for them and having them signed off on by all important parties. It’s also important for corporate owners to keep track of their business expenses and to maintain separate bank accounts in addition to filing an annual tax return for their company.

There are liability protection benefits associated with some of the many different corporate structures that exist. It can be helpful for you to have corporate liability insurance to make sure that you’re extra protected though. An attorney in Omaha can advise you of how to lawfully incorporate your Nebraska company so that your personal liability is kept to a minimum.