In just about every creek, eddy and harbor, you can find boaters scrubbing, waxing, polishing and varnishing boats into shiny emblems of nautical pride. Appearance, most would agree, matters in boating.

But hulls and decks are not the only things that need a critical eye. The prudent owner appreciates that these superficial shallows must be joined by more important concerns, and one item at the top of everybody’s list should be minimizing personal liability.

Breaking free of the shoreline inevitably involves facing some form of risk, whether it is slipping on a damp deck or colliding in a New England fog. Some boaters seek to minimize that risk and obtain other advantages by owning vessels through a business.

Corporate ownership takes care, just like your boat.While there can be advantages to corporate ownership, a business is as much in need of the occasional wax and polish as the topsides. It is vitally important that the business be kept in seaworthy condition to ensure that you gain all of the benefits of such an arrangement. Fail to keep your company shipshape and it could be costly.

CORPORATE OWNERSHIP

As far as modern-day conveniences go, the corporation follows closely on the heels of the paperclip and the Post-it Note. A corporation or a limited liability company allows its members to pursue business opportunities, own property and take other actions while largely protecting them from personal liability.

Corporate ownership allows for anonymity; has the potential to offer income tax savings; and it can be a buffer against becoming ensnared in a lawsuit. It is not a course for everyone, and some lawyers will recommend against it. But for people in the right set of circumstances – particularly those who charter their boats or have paid crew – corporate ownership can prove beneficial.

Like a good varnish job, most of the work involved in establishing corporate ownership comes in the form of preparation. Whether it's ensuring a proper registration or implementing an operating agreement, a business may not be considered legitimate until certain tasks are completed. It will also need its own bank accounts, accounting, tax preparation and other services.

If you ignore the terms of your corporate agreement you may find it fails you when you need it most.For most boat owners, this is not a do-it-yourself project. Boaters taking this course should rely on a professional to establish the company and set proper procedures in place, and then plan to carry out the maintenance tasks associated with the business.

CORPORATE MAINTENANCE

Once a business is formed, it should not be ignored. The laws of the state where the entity was formed may require that annual meetings be held, that forms be filed and that fees be paid. It's usually pretty easy to keep a business healthy, with a minimal amount of attention. But, just like a boat, problems can arise when things are neglected.

Too often, an owner forms a corporation and buys a boat, but soon abandons the procedures required to properly maintain that ownership structure. For example, the owner may start paying the boat’s expenses from a personal checking account, rather than corporate funds.

By "walking out" on the business in this way, the owner can lose the benefits that were the very reason for this kind of ownership. If your boat is owned by a business, then the business is responsible for the boat's expenses. In other words, if you disregard the business entity, the law may disregard the corporate form – and the protections it affords.