In creating a business entity, it is important to observe all formal corporate requirements from the outset. The following guidelines may be helpful to avoid violations of Massachusetts corporate law which could result in personal liability for the stockholders of the corporation:

• Choose a distinct corporate name to avoid entities that may be under common ownership.
• Prepare and file Articles of Organization. Prepare and adhere to corporate By-Laws.
• Provide for adequate capitalization, commensurate with the risks involved.
• Obtain an employer identification number from the Internal Revenue Service. 
• Ensure that each corporation maintains appropriate insurance coverage, including workers’ compensation and general liability insurance.
• Hold an initial meeting of incorporators to adopt the By-Laws and elect the directors, a president, treasurer and clerk. Hold annual and regular meetings of directors and shareholders, observing the required notice requirements. 
• Prepare written minutes of each meeting, and keep written records of each director and shareholder meeting, including the written notice (or signed waiver) of each meeting, in a corporate record book.
• Perform periodic internal legal and accounting audits to ensure the accuracy of corporate books and that all legally required corporate formalities are being observed (e.g., annual meetings, election of officers and directors and annual filings).
• Issue stock certificates. Maintain detailed and updated stock ledgers chronicling the identity of stockholders, the transactions of stock issuances, and purchases, sales and redemptions of stock.
• Consider federal, state and international trademarks of the corporate name and logo, if appropriate.
• Be sure to hold directors’ meetings to approve expenditures for major capital items, long-term leases, and executive salaries, bonuses and compensation plans (particularly for shareholder employees).
• File annual reports with the Secretary of State’s office. File “doing business as” certificates with appropriate local municipalities to properly give notice that a trade name (e.g., “Pepsi” instead of “PepsiCo, Inc.”) is being used for a corporation rather than an individual, in order to preserve the corporate liability protection.
• Properly register as a “foreign corporation” in any state or jurisdiction in which the corporation owns real estate, maintains offices, has employees or otherwise is deemed to be “present” in that state.
• Maintain separate written records and financial accounts between separate corporations. Avoid intermingling of corporate funds, property, and transactions with those of other corporations, or of shareholders, officers and/or directors.
• Document all financial and asset transfers between separate business entities, including secured promissory notes, bills of sale, assignment and assumption agreements and other similar documents. Use independent property appraisals to demonstrate the arm’s-length nature of transactions.
• Produce, retain, and periodically update separate business plans (a statement of business opportunity and objectives, along with projected revenue and expenses) for each corporation.
• Clearly establish the identity of the corporation interacting with any third party by using the full corporate name on business cards and in correspondence and documents. Always sign using the appropriate title in each instance (e.g., CEO, President or Treasurer).
• Declare dividends periodically if economically feasible.
• File separate income tax returns, payroll tax returns and comply with all state and federal tax requirements in a timely fashion.
• Consider electing different slates of officers and directors for separate corporations owned by the same shareholders.
• Ensure that a corporation has an economic purpose other than solely to shield the legal liability of another corporation.
• Be meticulous about correspondence, agreements, books and finances relating to the corporation, as well as allocation of expenses if a central business office is used for multiple affiliated business entities.
• Document loans to shareholders, officers, directors or employees with promissory notes, and consider securing them with collateral of adequate value (consider a revolving loan if frequent loans are made to a shareholder).
• Be aware that the “corporate limited liability shield” does not protect an individual from personal liability for torts or damages caused by the individual. The limited liability shield instead protects the personal assets of individual stockholders from claims of corporate creditors.