So I googled this real quick and found a list of exceptions here.
Signs a personal guarantee of the loan or other business debt and the LLC defaults on its payments
Personally and directly harms or injures someone
Fails to deposit taxes withheld from the LLC’s employees’ wages
Intentionally takes action that is fraudulent, illegal, or reckless that results in damage to the company or harm to somebody else
Fails to treat the LLC as a separate legal entity
I think the bolded reason is why your proposed scheme won’t work. This would probably also be why a company couldn’t shield themselves from liability for harm from their AI product by making a bunch of subsidiaries they wholly own—those aren’t really separate entities.
To ensure that you are treating the LLC as a separate legal entity, the owners must:
Avoid co-mingling assets . The LLC must have its own federal employer identification number and business-only checking account. An owner’s personal finances should never be included in the LLC’s accounting books. All business debts should be paid out of the LLC’s dedicated bank account.
Act fairly. The LLC should make honest representations regarding the LLC’s finances to vendors, creditors or other interested parties.
Operating Agreement. Have all the members executed a formal written operating agreement that sets forth the terms and conditions of the LLC’s existence.
I imagine the bite is in the “act fairly” part? That sounds distressingly like the judge just squints at your LLC and decides whether they think you’re being reasonable.
So I googled this real quick and found a list of exceptions here.
Signs a personal guarantee of the loan or other business debt and the LLC defaults on its payments
Personally and directly harms or injures someone
Fails to deposit taxes withheld from the LLC’s employees’ wages
Intentionally takes action that is fraudulent, illegal, or reckless that results in damage to the company or harm to somebody else
Fails to treat the LLC as a separate legal entity
I think the bolded reason is why your proposed scheme won’t work. This would probably also be why a company couldn’t shield themselves from liability for harm from their AI product by making a bunch of subsidiaries they wholly own—those aren’t really separate entities.
Thanks for doing research!
Your link goes on to say:
I imagine the bite is in the “act fairly” part? That sounds distressingly like the judge just squints at your LLC and decides whether they think you’re being reasonable.