Legal Question in Business Law in New York

Corporate veil pierced, personally liable?

Hi Dear gurus...I started a corporation not too long ago but because the online incorporation service I used wanted a number for the business I went out and got a new phone line so I wouldn't use the phone line in my house. I live with others since I am still young and wanted to save money to use towards the business. Anyway this is a 2 phase question.

1) I have the phone line in my name and it is paid with my debit card to my personal account, I had the number set up before the corp was so I could use it on the form for the corp.

2) On some forms I have obviously used that number as the business number but also I believe where they ask for a number for the Director or President.

I have no intentions of even trying to deduct the phone line as a corporate expense since $300 a year seems petty to me. Will the government use something so little as this to try to claim I pierced the corporate veil? They incorporated me with the facts being like that from the start or is ''piercing the corporate veil'' defined in bigger things such as mixing finances with personal finance?


Asked on 3/04/05, 1:30 am

1 Answer from Attorneys

John Friedman Law Office of John K. Friedman

Re: Corporate veil pierced, personally liable?

You've nothing to worry about so long as you preserve the corporate formalities. Without going into too much detail piercing the corporate veil in NYS takes more than a single corporate bill being paid for by a personal debit card.

You may, however, want to re-arrange your payment situation w/ the phone company. It sounds like perhaps you've not set up a corporate bank account yet. You should do this ASAP and then have the phone bill paid directly from that account. You MUST avoid treating your corporate account as a mere extension of your personal finances to preserve the corporate veil.

If you'd like to discuss this or other corporate law issues, feel free to call the office.

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Answered on 3/04/05, 9:19 am


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