Forming a corporation or LLC usually keeps an owner’s personal assets separate from the company’s debts. This video shares new information for Michigan business owners about the corporate veil and when courts may set it aside.
What this video covers
- What the corporate veil is and why it matters
- Mixing personal and business finances
- Underfunding the business and ignoring formalities
- Fraud and treating the company as an “alter ego”
- Practical steps to keep liability protection in place
When can a business owner be held personally liable for company debts?
Our related article explains that courts may disregard the corporate structure when it is used to commit fraud, evade legal obligations, or otherwise operate improperly. Factors courts consider include commingling funds, underfunding the business, failing to keep records or hold meetings, deceptive practices, and treating the company as an extension of the owner.
To protect the separation, the article recommends keeping separate bank accounts, paying yourself a reasonable salary rather than withdrawing money at will, funding the company enough to cover foreseeable obligations, documenting key decisions, and carrying appropriate insurance.
Read the full article: The Corporate Veil: When Business Owners Can Be Held Personally Liable
If you have questions about protecting yourself as a business owner, contact Tishkoff PLC through our contact page or call 734.663.4077.
This video and page are for general informational purposes and do not constitute legal advice. Watching the video or reading this page does not create an attorney-client relationship. You should consult counsel for advice on your specific circumstances.