🌱Forming an LLC or C Corporation gives you access to limited liability but these entities must be properly run to maintain that limited liability.
🌱Do Your Paperwork!🖇️
🌱Have you heard of “piercing the veil”—where “the veil” refers to limited liability? If you do not correctly operate your LLC or C Corp, a creditor can still claim your personal assets (and those of your co-owners) 💸🛋️🏎️🛥️🏠
🌱Business owners are held personally liable when they don’t bother to maintain the paperwork. They do deals with a handshake🤝 ; move money around without documenting for what and where 💰 ; and, fail to file necessary forms with state and federal authorities 📝 The result? Creditors coming after their personal assets, and a court determining that the failure to maintain the limited liability entity properly means it doesn’t exist at all—and thus affords the owners no liability protection 😭
🌱 NO Commingling!❌
🌱Your LLC or C Corp is a separate legal and financial entity. You can transfer or loan money or assets to your company. The company can issue you profits, or other assets, as compensation for your role as an owner or your work as an employee. All of that should be in writing 📝 Money or assets flipping back and forth between you and the company = commingling assets. That can, and does, happen in many inventive ways: you’re paying company bills from your personal account, you’re paying for that family vacation on your business credit card or that top-of-the-line television set that started in the dispensary waiting room and ended up in your living room .
🌱Another scenario? Founders who start multiple companies but don’t respect the corporate boundaries of the different companies. They’ll use the assets of one company to pay the expenses of another company, or the resources of one company to handle the business of a different company.
🌱If you don’t respect the boundaries of your different companies, including having separate bank accounts and completely separating resources for your different companies (or written agreements in place, under reasonable terms, to permit one company to provide services to the other), your creditors and the courts won’t respect those corporate boundaries, either 👩⚖️🙅❌
source info: https://mccarthygarberlaw.com Limits on limited liability when you become liable for your business debts