In Pennsylvania, many small businesses incorporate or form limited liability companies unaware that simply creating the corporate entity is not enough to effectively defer the liability or risk.  The Pennsylvania Supreme Court has articulated factors it will consider in determining whether or not it will disregard the corporate form or “pierce the corporate veil.” The factors to be considered in disregarding the corporate form are “undercapitalization, failure to adhere to corporate formalities, substantial intermingling of corporate and personal affairs, and use of the corporate form to perpetrate a fraud.”  Lumax Industries v. Aultman, 543 Pa. 38, 42 (1995).  Fully understanding these factors and their application is essential knowledge for any corporate business owner.

It is important to know the current state of Pennsylvania law or the efforts to incorporate or form a limited liability company may be worthless if a court “pierces the corporate veil.”  At Kamensky Cohen & Associates, we can counsel you on the current state of Pennsylvania law in connection with “piercing the corporate veil” and other corporate issues.  Please contact us today.  We look forward to speaking with you.

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