{"id":5292,"date":"2021-09-08T09:00:00","date_gmt":"2021-09-08T13:00:00","guid":{"rendered":"https:\/\/romyjurado.com\/?p=5292"},"modified":"2022-04-22T00:48:17","modified_gmt":"2022-04-22T04:48:17","slug":"can-a-single-member-llc-in-florida-be-pierced","status":"publish","type":"post","link":"https:\/\/romyjurado.com\/can-a-single-member-llc-in-florida-be-pierced\/","title":{"rendered":"Can a Single-Member LLC in Florida be Pierced?"},"content":{"rendered":"\n[et_pb_section fb_built=”1″ _builder_version=”4.16″ _module_preset=”default” custom_padding=”1px|||||” global_colors_info=”{}”][et_pb_row _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_text _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”]

Currently, the are more than 2 million small businesses<\/a> established in Florida, many of them structured as limited liability companies (LLCs). These companies are fundamental for job creation, as they employ and generate income for millions of workers.<\/p>\n

Although LLC owners indeed have limited liability, there are cases in which a court may decide to pierce a business’s “corporate veil”. However, it is possible to pierce a single-member LLC in Florida<\/a>? Keep reading to find out.<\/p>\n

Single-Member Limited Liability Company (LLC)<\/span><\/h1>\n

Many business experts consider LLCs to be hybrid businesses, as they combine the tax advantages and flexibility of partnerships with the level of liability protection usually granted to corporations.<\/p>\n

The owners of an LLC are usually referred to as “members.” When a single individual or even a single business entity owns an LLC, it is referred to as a single-member LLC.<\/p>\n

Both multi-member and single-member LLCs are protected from liabilities associated with the business. Hence, if a creditor files a lawsuit against the company, the owner(s) will not be held personally accountable.<\/p>\n

This level of asset protection<\/a> is valuable in situations when a creditor tries to collect an entrepreneur’s personal property to compensate for unpaid debt. Single-member LLCs also protect the business’s assets, as judgments placed against the owner will not affect property named in the company’s ownership.<\/p>\n

For tax purposes, the Internal Revenue Service (IRS) provides that single-member LLCs can be treated as corporations, partnerships, or as “disregarded entities.”<\/p>\n

When a single-member LLC is not treated as a corporation, which makes the LLC a “disregarded entity,” the company’s profits and losses will pass through it to its owner’s federal tax return.<\/p>\n

Piercing the Corporate Veil – Explaining the Term<\/span><\/h1>\n

The term “piercing the corporate veil” refers to a case when a court decides to put aside limited liability and hold the owners, shareholders, or directors personally liable for a company’s liabilities.<\/p>\n

Generally, courts in Florida tend to have a presumption against piercing the corporate veil. Hence, the only way to convince a court to do so is to provide unquestionable evidence of serious misconduct incurred by a business (specifically, a limited liability company).\u00a0<\/p>\n

Piercing the Corporate Veil of a Single-Member LLC in Florida – The Alter Ego Element<\/span><\/h1>\n

When pleading a court to pierce the corporate veil<\/a> of a single-member LLC, the plaintiff must provide evidence that the business structure was used as an alter ego of its owners.<\/p>\n

Additionally, the plaintiff must prove that the solo owner controls the business to such an extent that the LLC is just an alter-ego.<\/p>\n

Another possible situation includes the “mere instrumentality theory,” which materializes when a parent business \u2013 in this case, a single-member LLC \u2013 owns a subsidiary company that acts as a mere instrumentality of the parent company.<\/p>\n

Can a Single Member LLC in Florida be Pierced? – A Realistic Overview<\/span><\/h1>\n

Indeed, it is possible to pierce a single-member LLC in Florida. Nevertheless, doing so depends on a set of circumstances, especially the specifics of each company.<\/p>\n

Until the late ’70s, most companies in the United States were corporations. Then, the concept of creating a limited liability company was to design a type of partnership<\/a> with extra liability protection.<\/p>\n

Hence, depending on the case, it may be problematic to operate a limited liability company with only one owner. Typically, the main problem is separating the company’s assets from personal assets, and that is where most single-member LLC owners fail.<\/p>\n

Accordingly, various circumstances may constitute legal grounds for piercing the corporate veil of a single-member LLC, such as:<\/p>\n