# Entrepreneur of the Week Tomer Maor # Post 4

Took me 3 posts, but it's probably inevitable: this post will be entirely legal. Mercy, Danny, Roy, some lie and all the stars from the previous posts will not be with us today.
Because today we will talk about screens. Or rather, one screen - the corporate veil. In other words, we'll talk a little bit about the protection you get when you work through an LLC (or other restricted forms of incorporation for that matter). I will try to make this post as dry as possible and as much as possible appealing to an audience that is mostly not lawyers (actually, in Israel, the majority are lawyers).
First of all, it is important to understand that this issue of corporate legal protection is complex and rich enough to fill entire books, so do not expect to find here all the information and all possible explanations. I will try to touch on some points that I think are relevant and extremely important to the real estate investor and in general to those who are making their first business moves in the United States.
So let's start with the basics: what is an LLC, I guess most of you know (Limited Liability Company). What is meant by "limited liability" - by and large, this means that the company's obligations and liabilities will not apply to the company's owners privately. If, for example, a tenant sues you for a million dollars because a ceiling fan fell on him in the house he rents from you, and the court ruled that the landlord (ie you) is guilty of damage and has to pay, then theoretically the tenant can only repay LLC assets (assets not in terms of assets Real estate only, but also bank accounts, finances, etc.).
So why just "theoretically"? Because the degree of protection you get from your LLC depends almost entirely on your conduct. By and large - if you fail to create a complete separation in the conduct between you personally and your company as a business activity, you risk "puncturing" this protection (in Hebrew the term "screen lifting" is used; in English the term is pierce the corporate veil).
So there are the obvious cases: if you act maliciously, if you commit fraud or deliberately put the company in a situation where it owes money that you know in advance that the company will not be able to pay - yes, it probably will not help you that there is a company.
But what about situations of good faith? Like the tenant case suing you for the ceiling fan?
These are cases that you should be protected from if you have done the right thing.
So some tips:
Separation: The separation should be complete. Company property is company property. Her bank account is hers. Your personal payments should never be made from company funds. Company payments? Never from your personal account. Separate accounts, separate conduct, separate everything.
This is the place to mention a nice word: Commingle or “mess”… Did you pay for dinner with your family from the company credit card? You mixed. Kimangalatam (well, it does not work in Hebrew).
Corporate conduct: Manage books and follow-up, protocols. Make sure you have an orderly Operating Agreement, not one that you downloaded and did not even fill in the details. Keep in mind, that today there is a tendency for the courts to increasingly raise the bar of incorporation in the absence of separation and corporate conduct (especially in an LLC with one member). Some states have already traditionally begun to raise the bar of incorporation into an LLC with one member so much so that it is worth considering taking certain strategies to avoid it.
In signatures, make sure you have the company name and "through" your name and title. And here is an opportunity to use names from previous posts as an example:
Sheker Kolshehu LLC
BY: Rahamim Lo Yada, Manager
Always think before you take action, and ask yourself: Who is it for? What is it for? It will save you a lot of headaches.
Good luck friends and remember: do not get upset.
In the photo: Me and the senior partner have a discussion about screens and Comingal (taken that day and the status of the photo with the partner mentioned in the introductory post - a trip to the farm and watching "How to make maple syrup". The truth is cool).