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Your email address will not be published.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

Wait… Lawyers Do That?

Since the founding of the Strong Firm P.C. in 2004, we have prided ourselves on not only providing excellent legal services, but also playing a large role in our community. Every year I have the opportunity to speak to area students from first grade through college grad students on legal-related
Read More
Wait… Lawyers Do That?

Part II – Probate: Identify the Most Efficient Probate Proceeding – Muniment of Title

Texas law provides several options to transfer ownership of a deceased person’s (usually called a “decedent”) property. We previously discussed the difference between a dependent and an independent administration. The dependent and independent administrations are used when the deceased person’s estate exceeds some minimal thresholds for size or complexity, such
Read More
Part II – Probate: Identify the Most Efficient Probate Proceeding – Muniment of Title

But You are My Attorney, not My Dentist…

Preventive maintenance for your entity from a legal perspective   “An ounce of prevention is worth a pound of cure.” 'De Legibus' (c. 1240) by English Jurist Henry De Bracton   Potential Client:       “I have owned a limited liability company for several years. I haven’t had any issues, but someone is interested in investing
Read More
But You are My Attorney, not My Dentist…

Don’t Fall for This Chinese Trademark Scam

Don’t Fall for This Chinese Trademark Scam A trademark is any word, name or symbol used to identify and distinguish goods and services. For business owners, trademarks provide an easy way to build customer loyalty and communicate the quality and source of goods and services. Businesses often spend a great deal
Read More
Don’t Fall for This Chinese Trademark Scam
  • 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