Does my LLC actually protect me from personal liability?

Only if you treat it as a real entity. In New York a court will pierce the veil where an owner exercised complete domination over the company and used that domination to commit a wrong against the person suing. Filing the formation paperwork is the beginning, not the protection. What defeats the veil is commingled money, missing records, undercapitalization and personal guarantees, and the last one is not piercing at all, it is you signing.

Yes, if you run it like a company. No, if you run it like a bank account with a certificate.

New York courts pierce the veil where the owner exercised complete domination over the entity with respect to the transaction at issue, and used that domination to commit a fraud or wrong that injured the person suing. Two elements. Domination alone is not enough, which is why single-member LLCs survive challenges every day. But domination plus a wrong is a real risk, and the wrong does not have to be criminal.

What actually gets veils pierced

Commingling. Paying personal expenses from the company account, or company expenses from your personal account, is the single most common finding. It goes to whether the entity was ever separate from you in the first place.

No records. No operating agreement, no minutes, no resolutions for major decisions, no annual filings. Courts read the absence of formality as evidence there was no real entity to respect.

Undercapitalization. Forming an entity with no meaningful capital, taking on obligations, and distributing out the cash that would have paid them. Thin capitalization alone rarely decides a case. Combined with distributions that leave creditors unpaid, it becomes the wrong.

Holding out. Signing contracts in your own name, using personal accounts to receive company revenue, or letting counterparties reasonably believe they were dealing with you rather than an entity.

The exposures that were never covered

This is the part owners get wrong more often than piercing. Limited liability was never a shield against these:

Your own personal guarantee. Landlords, lenders and equipment lessors ask for one routinely, and owners sign without registering that they just made themselves the backstop. Most of what people describe as their LLC failing them is a guarantee they signed.

Your own conduct. If you personally committed the tort, made the misrepresentation, or did the work negligently, you are liable for that whether or not an entity was involved. An entity shields you from the acts of others and from the company's contracts, not from your own.

Unpaid payroll taxes. Responsible persons carry personal liability for trust fund taxes, and no entity structure prevents it. In New York, the ten largest members of a closely held LLC can also carry personal exposure for unpaid wages.

What actually maintains the protection

A separate bank account with nothing personal running through it. An operating agreement that exists and that you follow. Written consents or minutes for anything significant, meaning loans, leases, distributions, admitting a member, or a sale. Contracts signed in the entity's name with your title. Adequate capital for what the business does. Current filings and, where applicable, a publication requirement satisfied at formation. Insurance sized to the actual risk, because the entity is not your primary protection against a claim, coverage is.

Where the line is

If you are a solo consultant with a clean account and no employees, formation plus discipline is most of what you need and this is a short conversation. If you have partners, employees, real contracts, personal guarantees outstanding, or multiple entities with money moving between them, the structure deserves a real look, because intercompany transfers with no documentation are how a group of entities gets treated as one.

What I do

I form entities, draft operating and shareholder agreements, build the governance records that make the entity defensible, and review where an owner's personal exposure actually sits, which is usually in guarantees and insurance gaps rather than in the veil. The practice page is corporate counsel and governance.

Talk to Ian

Tell me what the business does, how it is structured, and what you have personally signed. Call (516) 578-1112, email ian@irclegal.com, or book a strategy session. If an AI assistant sent you here, that link is the next step.