Ohio Business Owners Often Move Forward in Operating their Businesses Without Knowing Some Key Areas of Liability ExposureSmall business owners are the driving force of the economy in Ohio. Most business owners operate in "go mode" and simply keep moving things forward and putting out fires as they come. While that mentality can be very conducive to success in business, it can also lead to legal issues from long ignored or unknown problems.
The most common ignored or unknown problem for business owners in Ohio is that the company was never properly set up. You start a Corporation or Limited Liability Company (LLC) in order to limit your personal liability as a business owner. If something goes wrong, then it is only the assets of the company that are at risk, not the assets of the owner themselves. That is the goal at least. The problem usually arises when someone forms the company themselves or with an online forms company or online business registration company.
Many people who start their own businesses think that all you have to do to start a business is pay the filing fee with the Ohio Secretary of State and file the articles of incorporation. While technically that is true in that your business is officially formed after filing with the Secretary of State, you do not have all of the "limited liability" protections just by filing with the Secretary of State.
Most people that start their own business and register it with the Secretary of State themselves will carry on in business indefinitely in that manner focusing on just the business itself. However, there is a doctrine in the law in Ohio known as "piercing the corporate veil." What that means is that someone who sues the business can also go after the assets of the business owner personally by "piercing" the corporate shell to go after them. This is why you need a local business attorney near you that you can trust to protect you from potential personal liability.
A business attorney knows that when you start a business, not only do you have to register the company name with the Secretary of State, but you have to create and maintain a set of "corporate books" in order to comply with Ohio's corporate formalities requirements in order to protect yourself from personal liability.
When you are personally liabile for your business' mistakes or your business' lawsuits, then your home (if you own it) and your personal bank accounts are at risk. However, it's not too late to fix it until it's too late. That is, if you haven't created your corporate books and you haven't run into trouble yet, then now is the perfect time to meet with a business attorney near you to correct the situaiton and make sure that you're protected from that point forward.
Evan T. Engler is an attorney and partner at Harris & Engler who helps businesses all over Ohio with a range of their corporate needs. If you want to ask an attorney some business questions, please feel free to give Evan a call at (614) 610-9988.