2023 is here! For entrepreneurs, the New Year means preparing State and Federal IRS business tax returns.
How preparing tax returns can help strengthen your business' Corporate Veil.
While I am not a tax attorney, preparing your tax returns allows you to get a full grasp of your cash flow, expenses, financial habits, and financial projection. Pay close attention to your bank statements to see if you have commingled funds. Commingling funds is when an entrepreneur uses their personal bank account to pay for business expenses or their business bank account to pay for personal expenses. If your business is ever sued, commingling of funds can result in "piercing the Corporate Veil". If your Corporate Veil is pierced, this means that your personal assets such as your house, car, real estate, and personal bank accounts can be used to satisfy the debts.
Corporate Veil Goals for 2023
It is highly suggested that entrepreneurs use this tax preparation season to review their past spending habits and bank account management practice. If you do not have a business bank account, please open one up immediately. If you do have a business bank account, make sure to only use that account for business expenses. Proper business bank account management can help your business maintain strong Corporate Veil protection, which in turns protects your personal assets.