Business Litigation Lawyer Rockville MD
If you have a business, it is important to work with a Rockville, Maryland business litigation lawyer to set up your business entity to protect yourself from personal liability. Should you be unable to pay your creditors or if someone files a lawsuit against your business, this will help to protect you. In order to be assured of that protection, there are several steps a business must do and continue to practice.
Businesses should form a corporation or a Limited Liability Company (LLC), which will protect you from being personally responsible for business debts. A business law lawyer Rockville MD can help you set up a corporation or LLC. It is important to keep funds from that business separate from your personal funds. If you incorrectly use personal funds for business use or vice versa this is called ‘piercing the corporate veil.’
What are the Consequences of Piercing the Corporate Veil?
If a court rules that your corporation or LLC was guilty of piercing the corporate veil, the shareholders, owners, or members of the LLC or corporation can be personally liable for the debts of the company. Creditors are not limited to the resources of the business but can seek payment from the owners and any of their assets including their bank account, home, investments, and any other assets. It is important to note that the court will only hold those responsible for piercing the corporate veil liable for the debts of the company.
Situations Where Courts Will Pierce the Corporate Veil
- There is not a specific separation between the owners and the company. The court could declare that the LLC or corporation is not a real company if the owners do not keep their personal and business financials totally separate. An owner cannot legally pay personal bills through the business checking account. A court could decide that the business owner has no legal protections that a corporation or LLC offers.
- The company acted fraudulently or wrongly. If the owner borrowed money from the company for non-business reasons or engaged in business dealings where the owner knew they would be unable to pay costs associated with the business deal, or was otherwise dishonest or reckless, the court could revoke any limited liability protection because the owner was guilty of financial fraud.
- The business did not pay its creditors. If a creditor is not paid or if the business has an unpaid judgment against them and they have also committed any of the above infractions, the court may pierce the corporate veil to get the creditors paid.
Smaller companies are more guilty of commingling corporate assets with their personal assets. A business should never write a check from the corporation to cover a personal expense. In addition, any checks made out to the corporation must be deposited in the corporate account. If it is deposited in a personal account, that is considered commingling assets and you are guilty of piercing the corporate veil. Talk with a business litigation lawyer Rockville MD to have your assets assessed for any potential fraud.
Contact a Business Litigation Lawyer Rockville MD
If you are in a position where you are part of a lawsuit that lists you personally and your business as defendants, or someone you owe money to is threatening to sue you personally, seek the assistance of a business litigation lawyer Rockville MD to defend you. The Law Office of Daniel Wright is experienced and equipped to handle these types of situations and can best advise you of your next steps. When you need to speak with a business litigation lawyer Rockville MD trusts, call the Law Office of Daniel Wright.