Forming an LLC alone won't protect your personal assets if you don't operate it separately from your personal finances. Mark Kohler warns that mixing business and personal money, using personal credit cards for expenses, and poor bookkeeping give courts grounds to pierce the corporate veil. Keep dedicated bank accounts and clear records instead.
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This is where protection is actually won or lost. Mistake number 6, you have an LLC, but you don't treat it like one. It's the little things, and it has nothing to do with the filing and everything to do with your behavior after you form the LLC. People tell me they have an LLC and we go to start working on their taxes, then come to find out all the income is landing in their personal account. They've got bills paid out of how many different credit cards or bank accounts. They pay personal bills out of the business. They pay business bills out of their personal account. They even Venmo themselves randomly. No separate bank account. Account even sometimes, no books, no line between where the company ends and begins. Let me be blunt. If you don't treat the LLC like a separate person, a separate entity with its own bank account and transactions, why on the earth is a court going to uphold your LLC when you don't treat it like an LLC? That's the exact moment a lawyer starts saying, "Pierce the veil." And if they win that argument, that's when a creditor can start going into your personal life and taking assets or money off the table because the LLC isn't protecting you anymore.
