What is Piercing the Corporate Veil? Definition, requirements, and how it applies to your business formation. Learn everything about piercing the corporate veil for LLCs and corporations.
# Piercing the Corporate Veil
Piercing the corporate veil is a legal doctrine that allows courts to hold business owners personally liable for entity debts, despite the limited liability protection that LLCs and corporations normally provide. Courts pierce the veil when owners treat the entity as an alter ego — commingling funds, ignoring formalities, or using the entity to perpetrate fraud.
The most common factors courts consider: commingling personal and business funds, failing to maintain separate records, undercapitalizing the entity, not following corporate formalities, and using the entity to commit fraud or injustice.
Lovie's compliance tools help maintain the separation between personal and business affairs that courts require — separate banking, proper documentation, and formality reminders.