Search Site
Menu
Using a Limited Liability Company to Shield You from Liability

One of the most common questions we hear when a client is starting a new business is “How can I make sure that I am protected from liability?” This critical question should be asked when considering any new business venture.  The most effective method of limiting one’s liability in a new business venture is by forming a legal entity that will become the responsible party in any business contract.  A common entity used to accomplish this goal is a limited liability company (an LLC).

Overview of an LLC and similarities to Corporations

If properly formed, an LLC can serve to limit the liability faced by its owners, which in the case of an LLC are known as members.  Typically an LLC is more flexible than a corporation regarding the transfer of ownership and operations, and it is well-suited for companies with a single owner. Unlike a corporation, an LLC is not required to have a board of directors or officers and can be managed by the members.

Guaranties and Piercing the Corporate Veil.

It is critical to understand that the limited liability offered by an LLC does not imply that members are protected from personal liability in all circumstances.  Most loans and leases entered into by an LLC, especially a newly formed LLC, will require that one or more of the members guarantee the payment or performance of the loan or lease.  In these cases, any such guaranteeing member would be exposed to potential personal liability if the LLC does not pay or perform as required under the loan or the lease.  Courts can also hold a member of an LLC personally liable by what is called “piercing the corporate veil” of the LLC, specifically, in cases where a member has committed fraud, made intentional misrepresentations, or when the loan, though in the name of the LLC, was actually solely for personal benefit of a member and not the company.  Attorneys have also attempted to “pierce the corporate veil” by proving that the company was actually never properly formed or was simply a sham company formed for the purpose of shielding the alleged, wrong-doing member from liability that he or she should rightfully face.

Eric R. Thiergood, Sr.

Phone Number: 281-367-1222

Fax Number: 281-210-1361

[email protected]

 

Leave a Reply

Your email address will not be published. Required fields are marked *

Contact a Dedicated Texas Business Lawyer To Schedule a Consultation
Call 281-367-1222 or contact us online to schedule a meeting.

Strong In Action

  • Spring 2019

    The Strong Firm represents borrower in $42.3 million HUD construction loan for multifamily real estate development in Walton County, Florida.

    Read More
  • Spring 2019

    The Strong Firm acts as legal counsel for borrower in $32.1 million HUD construction loan for multifamily real estate development in Conroe, Texas.

    Read More
  • Spring 2019

    The Strong Firm aids borrower in $31.7 million HUD construction loan for multifamily real estate development in Nueces County, Texas.

    Read More
  • Spring 2019

    The Strong Firm represents borrower in the refinancing of a $3.57 million commercial mortgage-backed security for a commercial office facility in Montgomery County, Texas.

    Read More
  1. 1
  2. 2
  3. 3
  4. 4
  5. 5
  • Peer Rated 2019 Award

Recent Blog Posts

Legislation Authorizes Paid Sick Leave for Workers Suffering from Coronavirus

New legislation passed in response to the COVID-19 pandemic allows certain workers to receive paid sick leave even if their employer previously did not provide it. In March, the federal government enacted the Families First Coronavirus Response Act (FFCRA). This law assists employers that give their employees paid time off
Read More
Legislation Authorizes Paid Sick Leave for Workers Suffering from Coronavirus

Lenders Suspend Home Foreclosures Due to COVID-19, But What Happens Next?

Many large financial institutions are suspending foreclosures because of the massive economic damage caused by COVID-19. Some banks have stopped proceedings indefinitely. Others have set time limits for foreclosure suspensions such as 60 or 90 days. Even as health and financial issues remain uncertain, this is a good time for
Read More
Lenders Suspend Home Foreclosures Due to COVID-19, But What Happens Next?

How Can I Create Estate Planning Documents During the Pandemic?

Even in its first few weeks, the COVID-19 pandemic caused many people to examine or reassess what is most important to them. The need to prepare in case of an emergency or untimely death has been highlighted by the tragic losses occurring around the country. What can you do if
Read More
How Can I Create Estate Planning Documents During the Pandemic?

Complying with Corporate Annual Meeting Requirements during the COVID-19 Quarantine

How do you hold a corporate annual meeting when the entire country is in lockdown? On the surface, it might seem like a simple matter of using a favorite video conferencing tool and perhaps checking to see if it’s been hacked. Annual meetings for corporations are more than get-togethers. They
Read More
Complying with Corporate Annual Meeting Requirements during the COVID-19 Quarantine
  • Video Vault


    Watch videos done by our legal team to gain a better understanding of your legal needs. Our lawyers give video insight into areas such as Real Estate, Business Law, Mergers & Acquisitions and much more.

Pay Retainer Online

Use our easy-to-use and secure online payment feature.
We accept all major credit cards.

Pay Your Retainer

Contact us

Quick Contact Form