Operating your business as a
corporation or Limited Liability Company (LLC) won't guarantee that a corporate
creditor won't sue you personally to collect a corporate debt. Corporate
creditors oftentimes sue its corporate officers and stockholders.
Corporate creditors who try to pierce the corporate veil usually argue
that their owners are alter-egos of their corporations. If you are that
corporate owner, they'll succeed unless you follow basic corporate
formalities. Correctly operate your corporation or any other legal entity.
Operate your entity independent of yourself individually, or any other
entity. If a corporate creditor can successfully argue that you and your
corporation function as one, you could lose your corporate protection.
Document asset transfers between you and your corporation, as well as transactions
between related companies. If you operate as a corporation or LLC, your
legal documents should say so. Put your corporate name and title alongside
your signature on all documents. If you own multiple entities, have the
officers and directors of the related corporations hold different positions,
conduct separate corporate meetings, and maintain separate corporate books.
Recording major director and shareholder actions is also important. You
should not voluntarily dissolve your corporation if it has outstanding
debts. These corporate debts then become your personal obligations.
Observe every corporate formality. Ensure that your corporation has its own:
Each point establishes your corporation as a separate entity.