Lisa and the Law

The Corporate Veil – Maintaining your personal liability protection

When you form a business entity (LLC, Limited Partnership or Corporation), the owners are given limited personal liability for the actions of the business entity and their role in it by law (called the corporate veil). Managers, employees, officers and directors are afforded the same protection. So long as you operate in your capacity as an owner, manager, employee, officer or director, you will not have personal liability for any claim against the business entity itself. However, if the business owner(s), treats the business as a plaything and fails to treat the business as a completely separate entity, creditors and claimants may ask the court to disregard the corporate veil and go after the business owners. It is critical to maintain all corporate/company formalities to keep the corporate veil and its protection in place.