As this was explained to me from my accountant:
Under the provision of "S Corporation" blanket of protection.
You must treat your business as a business and keep it seperate from your personal matters. The Govermnent provides protection of personal assests under the "S Corporation" designation.
However, If you do not abide by these requirements and keep the business seperate from your personal assests and do not have documentation to back up all transactions, the protection provided to you under the "S Corp" umbrella could be restricted.
In a nutshell, if you are Joe Blow Electric, and you cash the business checks and do not report them, You are not treating the business as a business. If something happens and you get sued, the attorneys can possibly go after your personal assests. If you treat your business as a business, within it's provisions, the "S Corp" umbrella protects your personal assests.
Hope this makes sense......
Dnk.........
