Can someone sue us personally if the debt is against a company we dissolved?

Attorney answers (1)

1. 

   Richard S. Jaffe

   New Hyde Park Personal Injury Lawyer

   Contributor Level 12

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   Answered December 28, 2009 17:01. If formed and managed properly, corporations and LLCs are treated as legal entities separate from their owners. This is why business lawyers are constantly nagging sole proprietors to form a legal entity. Doing so allows the business owner to protect his or her personal assets from lawsuits against the company. Without a legal entity, a sole proprietor's home, bank accounts, cars, etc. can be lost in court. The formal legal entity, such as a corporation or LLC, provides a "veil" of protection between the company's assets and those of the business owner.
   
   But it's not enough just to incorporate. You must also treat your company as a separate entity, including having separate business bank accounts, separate business books, paying only business expenses out of your business account, observing corporate formalities including holding all required meetings of company officers, and diligently maintaining your corporate records.
   
   If you managed your business properly, a judgment against your company will be limited to the company's assets and your personal assets will remain untouched.
   
   If, however, you commingled funds between your personal and business accounts, failed to adequately capitalize your business, or failed to observe corporate formalities, a court may justify piercing the corporate veil and hold you personally liable for any actions of the company, putting your personal assets at risk.

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