Carelessness about respecting the separate identity of the business entity can lead to personal liability of the owner.
In 2005, there were several Connecticut Appellate Court cases in which creditors attempted to impose personal liability on the owner of a business entity. In one case, the entity was a Stock Corporation. In another case, the entity was a Limited Liability Company. In both cases, the Court declined to hold the owner personally liable. In reaching its decisions, the Court emphasized the importance of respecting the independent integrity of the business entity. There should be no commingling of funds, documents should be signed in a representative capacity on behalf of the entity, and regular meetings of owners should occur and be recorded. Failure to follow the formalities creates a possibility of personal liability on the part of the owner.