Hi, this is Lee Phillips.
I'm an attorney and you're udoubtedly
turned into my YouTube channel.
We talk about attorney-type things.
And one of the things that we've talked
a lot about are the corporation, the LLCs,
the formalities that are required, and inherent
in the corporation for the LLC is the corporate shield.
Can't sue me.
I've got my corporation, my corporate shield,
it protects me.
They call it a corporate veil, a corporate shield,
whatever you want, and it protects you
from what happens out in the business.
What is this corporate shield?
All the formalities we use to prove, your honor,
we've got a real corporate shield.
What is it?
And I have a hard time envisioning it,
but I think I've come up with a vision of it.
The purpose of the corporate veil
is to hide you from the people that the company deals with.
They don't know who the directors, the officers, are.
They don't know that you're the owner.
You're supposed to be the guy behind the curtain.
Remember in The Wizard of Oz, the man behind the curtain?
You are the guy behind the curtain.
You pull the strings, you make it all work,
but the public doesn't know who you are.
When you step out of your role as the manager of the LLC,
or the president of the company, and you do things
as president of the company, manager of the LLC,
and you need to let the people know that they are dealing
with an LLC, corporation, you need
to let people know that they're dealing with you
and you are representing the company.
When you step out of that role and they can't determine
whether they're dealing with you or they're
dealing with the company, then you
have jeopardized the corporate shield, the curtain,
whatever you want to call it.
The veil.
A veil's a curtain, right?
You stepped out around behind from the curtain
and they can now see you as an individual.
As soon as they can see you as an individual,
and not you as the president of the company acting
on behalf of the company, then we've got a problem.
Because they say, no, no, your honor I
was dealing with this guy.
I wasn't dealing with the company.
I wasn't dealing with the president.
I was dealing with him.
So anything that you do that moves you out and around
from behind the curtain, that threatens your protection
through the corporate shield or the corporate veil.
You need to be able to maintain this anonymity, so to speak,
of who is really behind the company.
As president, you represent the company.
The corporate shield, the veil is intact.
But when you show yourself as an individual,
then we've got a problem.
Does that help maybe with what the corporate shield
or the corporate veil is?
And all of the formalities, the keeping
the records, the name on the business card,
having the meetings, and everything else,
goes to show that you were acting in his official capacity
and not the capacity of you as an individual.
So you have to think, which hat am I wearing?
Am I wearing my personal hat or am I wearing my company hat?
Now you may have more than one role in the company.
You could be, if it's a maintenance company
for real estate for example, sometimes you
could be the president or the manager of the LLC, president
of the corporation.
Sometimes you're going to be the janitor
guy who goes in and cleans up the mess in the unit.
Those are two different hats.
The people in the unit where you're cleaning up,
they should look at you as a hired gun,
just a guy, a janitor.
They don't need to know that you're the president
and they certainly don't need to know that you're the owner.
Because when you say, I'm the owner, you're dealing with me,
you've stepped out and around from out behind the curtain.
They now look at you as an individual.
And if they can convince the court
that they were dealing with you as an individual,
then they've got you.
Hopefully, that helps with the corporate veil
or the corporate shield a little bit to understand your roles
and understand why this shield protects you.
This is Lee Phillips.
I'm speaking on corporate and LLC matters.