Limiting Exposure to Liability Critical for Small Business Owners

If you’re a business owner, one of the most important legal concepts you need to be familiar with is limited liability. You’re probably somewhat familiar with limited liability if your business is structured as an “LLC” (which stands for Limited Liability Company) or “PLLC” (which stands for Professional Limited Liability Company). Additionally, if you’re a shareholder, you enjoy limited liability for the actions of the corporation. However, courts across the country have recognized certain circumstances where a court can “pierce” the proverbial “corporate veil” and hold shareholders liable for the actions and/or negligence of a company. The standard used to pierce the corporate veil is murky at best. Many courts utilize different standards. Even courts in the same state apply different tests. Nevertheless, the fundamental idea behind disregarding limited liability is when the shareholder does not treat the corporation as a separate legal person. Courts reason that if you...