Many family owned and operated businesses in McHenry County are organized as corporations under Illinois law. A family business owner who operates his or her business as a corporation must take the steps necessary to maintain corporate legal status in order to receive the legal protection afforded by Illinois law and to preserve the tax status of the business.

Family business owners typically choose the corporate form of existence based on the limited liability for the equity owners of the business; the decentralization of management; the ability to raise capital; the transferability equity interests; and tax considerations.

These goals are jeopardized if the business fails to follow the steps required by law to preserve corporate status. Contract parties, creditors, personal injury plaintiffs, IRS auditors and other claimants will examine the validity of the corporation to determine whether they can look through the corporate form to reach its shareholders. Personal shareholder liability can be disastrous for the business owner both professionally and personally.