Travis: Now, what's all this talk about pierced veil? I understand that a corporation is no good if the veil is pierced and they can come after your assets. What is that and how does it happen?
Jake: Well, when you form a Corporation, or LLC, there are certain formalities that you have to follow. With a Corporation, they're a little more stringent. You have to hold meetings once a year of directors and shareholders where you authorize certain actions like opening up bank accounts, doing business in another state, executive compensation, raises, different types of transactions. And, you also have to make sure that you don't co–mingle funds.
What I mean by co–mingling is, kind of taking a personal loan from your corporation or paying corporation debts using personal income. So you really want to create a separate bank account for your corporation or your llc. So that way, the funds remain separate.