| Entrepreneurs, business owners, financial advisors, and | | | | fact, he claims, there are very sophisticated, |
| attorneys all know that operating a business as a sole | | | | well-known and well-documented, legal strategies in |
| proprietor provides the least amount of protection in | | | | place today that will successfully pierce the corporate |
| case of a lawsuit. That's a given. But, did you know | | | | veil 96% of the time when specific facts are proven. |
| that incorporating, forming an LLC, or even establishing | | | | Most business owners don't even think about the |
| a partnership may not protect you either? | | | | devastating affects this can have on them until it's too |
| It's true. | | | | late. In fact, they usually don't even think about whether |
| Recently I read an outstanding report on The Myth of | | | | or not their corporate veil will even stand up in court |
| Corporate Veil Protection, written by attorney Stanford | | | | until they are standing in court, themselves. Or, in other |
| A. Graham. After spending more than ten years | | | | words, when it's too late! Most people incorporate their |
| researching more than 4,700 court cases, Mr. Graham | | | | business to limit their personal liability. Often they'll buy |
| concludes that your business entity may be providing | | | | into the marketing hype that establishing a Nevada or |
| you with far less personal liability protection than you | | | | Delaware corporation, an offshore corporation or a |
| think it might. | | | | trust is all they need to achieve personal asset |
| It doesn't matter whether you're operating as a | | | | protection. |
| corporation, limited liability company, or limited | | | | Even attorneys will suggest that liability protection is |
| partnership what makes a difference is not the form | | | | gained just by the act of incorporating a business and |
| of business you are using, but it's all about your actions | | | | then operating under that business name. |
| since you incorporated. | | | | Unfortunately, this simply is not true. |
| The "corporate veil" is the term used to describe the | | | | Citing multiple examples from his vast storehouse of |
| shield of liability a corporation, LLC, or limited partnership | | | | research, Mr. Graham establishes the case for |
| is supposed to provide the owners of the business. | | | | concern. Given the volumes and volumes of rules, |
| And, if you've read the papers or listened to the news | | | | regulations, and laws on the books today, business |
| very much you've probably heard about "piercing the | | | | owners can't possibly know all there is to know about |
| corporate veil." This refers to a court disregarding the | | | | maintaining their corporate veil. |
| existence of the business entity and holding the | | | | The article offers a beginner's list of rules that a |
| business owners personally liable. The corporate veil is | | | | business owner must follow; as well as an excellent |
| pierced by the court because the business owners | | | | guide for missteps to be avoided. While neither list is |
| didn't maintain all of the rules, requirements, and laws | | | | exhaustive - such a list would be far too cumbersome |
| associated with their particular type of business. When | | | | and impractical to publish in a short article - they both |
| the court makes this decision the business owner | | | | provide a great beginning point for any business owner. |
| becomes personally liable and may lose more than just | | | | Furthermore, Mr. Graham offers six key points for |
| their business assets. | | | | every business owner to follow as well as a free risk |
| According to Graham's Article, piercing the corporate | | | | assessment. |
| veil is the most litigated issue in corporate law today. In | | | | |