The reason a business owner may choose to form a corporation or limited liability company (LLC) is so that should the company find itself unable to pay its debts to its creditors, the owners, shareholders, etc. won’t have to be held liable; however, the courts could “pierce the corporate veil” and hold these people accountable in certain cases. The court will have to look at the circumstances of the business’ debt and take action based on that. A court will take action if it sees that the business owners are engaging in unlawful activity with corporate money. These unlawful actions include there being no clear separation between the company and its owners (such as an owner paying personal bills with corporate money or not following legal business formalities such as holding regular meetings and recording those meetings immediately afterwards), recklessness of the owner (such as making business deal although the owner knows he or she won’t be able to pay invoices), or if the company’s creditors suffer an unjust loss due to the company. Should any of these factors come to light, the court will be justified in taking action against the company or LLC.