Can business owners become personally liable in any other way?
Despite business entity selection, business owners, shareholders or members may become personally liable for business debts and obligations if they sign personal guarantees. For instance, business owners may be put in this position to obtain financing for the business from a bank. Once an owner, shareholder or member becomes personally liable for a business debt or obligation, the business’s creditors can go after personal assets, such as a house, car or bank account, or obtain liens on property. Directors, officers or shareholders of corporations and members of limited liability companies can become personally liable for judgments against the corporation or LLC in some cases. Courts may find personal liability after “piercing the corporate veil.” This is a theory of liability where a court can find a business owner liable for corporate debts by disregarding corporate status. Courts may do this when business owners form a corporation or LLC and use it to commit bad acts, such as fraud,
