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Options for Protecting Company Assets ： Corporate Veil, Charging Order, Single-Member LLC vs. Multiple-Member LLC vs.

When starting a business, many entrepreneurs look for ways to protect their personal assets from business risks, and while LLCs and Corporations are the primary options for doing so, each structure and mode of operation offers different asset protection mechanisms and benefits. This article details the differences in asset protection between Single-Member LLC （ SMLLC ） and Multiple-Member LLC （ MMLLC ） in particular, as well as how they compare to Corporations, with specific examples.

What is Corporate Veil ？

The basic concept of protection offered by LLCs and Corporations is the "Corporate Veil （ Corporate Veil ）". This means that the corporation is a legal entity independent of the business owners （ members or shareholders ） and that any liability or debt associated with the business is vested in the corporation itself. This mechanism protects the owner's personal assets in principle, even if the business fails or is sued.

Example 1: Suppose, for example, that the owner of a restaurant has formed an LLC to operate the business. If food poisoning occurs at the restaurant and a customer files a lawsuit, the LLC would be liable for damages. In this case, the owner's personal home and personal bank account would not be affected by the lawsuit. This is the protection afforded by the corporate veil.

Charging Order （ Charging Order ） What is a ？

Charging Order is a legal instrument that a creditor can take against a debt owed personally by a member of an LLC. Once this order is issued, the creditor can only file a claim against the distribution of profits the member receives from the LLC, and does not directly affect the assets of the LLC itself or the interests of other members. This allows the LLC to continue to operate while addressing the debts of individual members.

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https://www.hkstanfield.com/blog/assetprotection/