Liability Protection for Business Owners 

A Limited Liability Company (“LLC”) is a popular business entity choice for many entrepreneurs in Connecticut due to the liability protection it provides to its members and managers. This protection shields the personal assets of the LLC’s owners from the liabilities of the business, such as debts and legal claims. In this blog post, I will briefly outline the liability protections afforded to members and managers of limited liability companies organized under Connecticut law and what this means for business owners. 

Limited Personal Liability 

 The primary benefit of forming an LLC in Connecticut is the limited personal liability it offers to its members and managers. This means that if the LLC incurs debts or is sued, the personal assets of its owners, such as their homes, cars, personal property, and personal savings, are generally not at risk. Instead, the LLC’s assets are used to satisfy the business’s debts and obligations. 

Personal Guarantees  

While members and managers of an LLC generally have limited personal liability for the business’s debts and obligations, there are certain situations where an owner may be required to provide personal guarantees. For example, if the LLC is seeking a loan or credit line, the lender may require a personal guarantee from the members or managers to ensure that the debt will be repaid. In this case, the personal assets of the members or managers may be at risk if the LLC defaults on the loan. 

Piercing the Corporate Veil 

While liability protection is a core benefit of forming an LLC, it is important to note that this protection is not absolute. In some situations, the court may allow a creditor or plaintiff to “pierce the corporate veil,” which means that they can hold the LLC’s owners personally liable for the business’s debts or obligations. This typically occurs when the LLC is not operated as a separate legal entity from its owners, such as when the owners commingle personal and business assets or fail to maintain proper records.  

 It is essential for LLC owners to maintain proper records and documentation, including separate bank accounts, financial statements, and meeting minutes to prevent a creditor or other type of claimant from piercing the veil of protection provided by the LLC.  Owners should avoid commingling personal and business assets and should try not to use LLC funds for personal expenses unless appropriately accounted for in the records of the company.   

 Insurance Coverage 

While limited liability protection is a valuable benefit of forming an LLC in Connecticut, it is not a substitute for proper insurance coverage. Business owners should obtain adequate insurance coverage to protect their LLC and personal assets from unforeseen events, such as accidents, natural disasters, or lawsuits. This may include general liability insurance, professional liability insurance, property insurance, and workers’ compensation insurance. 


Law Offices of Bradford J. Sullivan, Esq. 

Connecticut LLCs provide important liability protection to LLC members and managers, shielding their personal assets from the business’s debts and obligations. However, this protection is not absolute, and LLC owners must take steps to ensure that they maintain the legal separation between their personal and business affairs. Additionally, obtaining proper insurance coverage can provide an extra layer of protection for the LLC and its owners. Consulting with Attorney Bradford J. Sullivan, who is an experienced business attorney, along with other professional services providers such as licensed insurance professionals can help ensure that LLC owners understand their legal and financial obligations and take the necessary steps to protect their personal assets. 

The foregoing should not be construed as legal advice. The facts underlying business liability issues vary and these unique circumstances sometimes affect the limited liability protections. Consulting with and hiring an experienced business attorney can help ensure compliance with legal requirements and avoid potential pitfalls including but not limited to time consuming and very expensive litigation.  

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