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Whether you formed a Limited Liability Company or an S-Corporation, aside from the tax advantages, chances are you incorporated with the purpose of warding off personal liability in the event that your business gets sued.
But did you know that the liability protection afforded by incorporation is not ironclad?
If a plaintiff can show that a corporation exists for fraudulent purposes, or that it is indistinguishable from its owners, courts will "pierce the corporate veil" and hold those owners personally liable.
Now that you've incorporated, your goal is to preserve the corporate veil such that the company will be held solely liable for any damages.
To accomplish this goal, you should do the following:
As this list demonstrates, the trick to maintaining the corporate veil is absolving yourself of any personal attachment to your business. You are no longer a sole proprietor, and therefore must act as though you were brought in to run new corporate entity.
Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.