Business Probate Nightmares
For many business owners, the future planning of their business falls into budgeting, inventory orders, and new product development. However,...
One of the major benefits associated with organizing your business as a limited liability company (LLC) is the ability to shield your personal assets from business liabilities. However, this protection is not guaranteed. LLCs will receive treatment similar to corporations, both in terms of the risk of veil piercing and the range of actions required to prevent a successful veil piercing.
An entity’s “veil” presumably shields personal assets of an LLC’s owners (called “Members”) from claims against the LLC. However, if an LLC cannot satisfy its liabilities, the protection of the “veil” may be disregarded. This so-called “piercing the corporate veil,” when successfully done, allows a claimant to reach a member’s personal assets to satisfy the business liabilities. In Ohio, three elements must be established to pierce the corporate veil: (1) the company is merely an alter ego of its members; (2) control over the entity was exercised to commit fraud or an illegal act; and (3) injury or unjust loss resulted from such control.
To lessen the risk of being personally liable for your LLC’s debts and liabilities, follow these simple principles:
For more information on these principles and techniques and how to avoid personal liability as a member of a limited liability company, contact Attorney Jacqueline Ferris MacLaren, with MacLaren Law, LLC .
This information is designed to provide a general overview with regard to the subject matter covered and is not to be construed as legal advice.
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