Legal Question in Business Law in Texas

Business Startup - Preserving 'Corporate Veil'

I have started a small business operating as an LLC. I am in the very earliest 'startup' phase of this and I have not opened business checking or credit accounts yet. The company is not generating revenue at this time.

I am incurring a ton of 'nickel and dime' expenses for equipment, fees, surety bond, etc...

My question is: What is the best way to pay for all of these expenses so that I won't lose the limited liability my LLC affords me?

My understanding is that the most important thing is to not comingle company funds with my own. Inasmuch as the company has no funds, this isn't a problem right now - the bank account will be open before any revenue is generated.

I have paid for most things with my personal debit card and/or checks. Should I draw up some sort of loan papers and call it a loan to the company? Or perhaps create an expense report and submit it to myself :-) ??

Thanks!


Asked on 2/04/05, 11:28 am

1 Answer from Attorneys
Peter Bradie Bradie, Bradie & Bradie

Re: Business Startup - Preserving 'Corporate Veil'

That is something best discussed with your accountant. My preference would be to 'lend' money to the LLC with a promissory note for the LLC to pay you back. That way it can be carried on the books as a short-term obligation.

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Answered on 2/04/05, 1:56 pm


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