Piercing the Corporate Veil in PA
“Piercing the corporate veil” is a legal term which describes what happens when a lawsuit against an LLC results in the individual members losing their limited liability protection.
This court ruling results in the owners personal assets being at risk.
If the company has not been run properly, a judge may rule against the LLC in PA. Judges consider several factors to determine whether or not to “pierce the corporate veil” of a limited liability company.
If one or several of these factors are found, the judge has the authority to lift the limited liability protections on the LLC members’ assets.
Factors leading to “piercing the corporate veil” include:
- Commingling of personal and business funds
- Lack of corporate formalities
As a result, there are several steps necessary to avoid “piercing the corporate veil.”
Basically, properly run businesses, including Pennsylvania LLCs, are in little danger of the court ruling to “pierce the corporate veil.”
Steps necessary to avoid “piercing the corporate veil”:
- Run a legitimate business, to avoid fraud.
- Keep separate business and personal accounts to avoid commingling of funds.
- Ensure official business documents are created. This includes such documents as the Operating Agreement, and the LLC Formation Documents. Make sure that the state mandated document filings are completed on time and the required fees are paid in full.
Forming an LLC in PA is a way for owners to limit their liability for bad business debts & lawsuits and to protect their personal assets in the event of a lawsuit.
Ensuring the Pennsylvania LLC is properly run as a legitimate business significantly decreases the likelihood of a judge ruling to “pierce the corporate veil.”
The LLC Formation Course
Regarded as “Pennsylvania’s #1 Online Course for LLC Formation”, our online course provides you with lifetime access to the LLC formation documents (there are 2 you need) as well as detailed, step-by-step video lessons taking you through each line of all the documents.
You don’t need to hire an attorney and spend $1,000 – $1,500 to form an LLC in Pennsylvania!
The PA State filing fee is $125, and the LLC Formation Course is a one-time payment of $179.
For $304, you can form your PA LLC yourself, and rest assured knowing that it is filed correctly.
To learn more about The LLC Formation Course™, click here.