• October 2018
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What are the most common ways that an LLC has its “veil pierced”?

Piercing an LLC’s veil occurs when a court comes to the conclusion that the business entity was merely serving as an alter ego for its members. At this point, the wrongful owners are treated as if they are agents of the corporation, thereby exposing them to personal liability. A major factor used to justify piercing the veil is when members deviate from corporate formalities. Other factors include:

  • Commingling the corporation’s funds with your own personal banking / credit accounts
  • Shareholders are holding the corporation as their own (lack of substantive separation)
  • A small number of SHs, who have an active hand in management
  • Purposeful undercapitalization

If any of those factors apply to your LLC then you should probably contact an attorney. Again, this is too big of a mess to deal with on your own. If you’d like the assistance of a startup lawyer at a fixed price, then head over to LawTrades. Also feel free to message me directly with any questions or concerns you might have regarding your situation. Good luck!

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