Lack of Substantiating Paperwork
All corporations have paperwork that must be completed and kept on file to prove the business and its owners are acting as a corporation rather than an individual.All corporations have paperwork that must be completed and kept on file to prove the business and its owners are acting as a corporation rather than an individual. C Corporations, S Corporations, Limited Liability Companies and Limited Partnerships all must have paperwork substantiating their existence as limited liability entities.
No matter which entity you choose, you will need, at a minimum, articles of incorporation or organization. But you may also need meeting minutes, a resident agent, a Federal Identification Number, and initial organization filings.
In order for a corporation to remain legally and financially separate from its owner (which is the most likely reason you incorporated to begin with), you must have the paperwork that makes your corporation real and proves its existence. And you must file the appropriate paperwork with the appropriate parties (such as government agencies and regulators).
However, no matter how carefully you set up your initial corporate documents, no matter how perfect and thorough they are, you arent done. There are a variety of filings, records and documents due every year. Forget to file the right papers with the right people at the right time and your company is no longer independent. Paper is all that protects you and your assets from lawsuits. But that paper, done right and right on time, can be like corporate Kevlar.