Capitalization

Simply stated: it is the process of financing a business operation via investment from the owners (shareholders). Most commonly reported in the equity section of the balance sheet. Initial investment is reported as common stock and capital paid in excess.

Piercing the Corporate Veil

Piercing the Corporate Veil

When shareholders invest into a corporation, there is an expectation of limited losses amounting to the financial investment made.  However, if the company is not properly run, officers, directors and shareholders are exposed to the blade of the law.  This is known as piercing the corporate veil.  Therefore it is critical for any shareholder, director, or officer of a small corporation to understand what is required to protect your personal assets from exposure to creditors and the long arm of the government.

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