There are a lot of one member corporations and L.L.C.s. The purpose of these business organizations, other than tax benefits, is to protect the owners from personal liability.
A litigator who has obtained a judgment against an L.L.C. or a corporation and wants to get to the owner for personal liability must usually “pierce the corporate veil” to do so. The first thing to look for is a lack of documentation of required corporate meetings and corporate elections. Some clients find it humorous to keep minutes of “meetings with themselves.” They may not find it humorous when the lack of those minutes illustrate a lack of corporate governance and their resulting personal liability.
Second, look for the cross-use of corporate and personal money, such as corporate loans used as personal funds by the owners or loans without written corporate authorization. Yet another indication of lack of corporate separateness from the owners is the personal use of funds from corporate accounts by the owners.
In short, if you are the sole shareholder of a corporation or L.L.C. you need to make sure you are following the proper procedures to avoid having the corporate veil pierced. Hiring a business attorney on the front end will aid you in avoiding having your personal assets attacked.
Call Rutledge & Yaghmai to help with your legal business needs.
