[ahnick]

I talked to a lawyer about this and the feedback I received was while technically they might be able to sue to try and receive compensation even from your personal assets if you are a single-member LLC as long as you can show you were acting in good faith and as an agent of the company (i.e. you didn't personally guarantee the work and sign your name instead of the company's and you maintain distinct records and finances for the business), then it is unlikely to get approved in a court of law.

So an example here might be that you were working for a client and work wasn't fully completed on time. You made a good faith effort to get the work done, so while the company you were working for might be entitled to compensation from your LLC they can't come after your house.

Finally, let me caveat all this by saying that the standards for "piercing the corporate veil" vary by state and as always you should consult with a lawyer before making a final determination. Also, another work around is to form a multi-member LLC and hold formal annual meetings. This is normally enough for most states to consider the LLC as a separate distinct entity and prevent piercing of the corporate veil.

[busterarm]

I also discussed this with the SBA and multiple attorneys (attorneys make up most of my clients, btw).

Here in NY, piercing the corporate veil is a bit easier than in other states. More importantly, if someone attempts to go down that road, you have to spend the time and resources ($$$) to defend your position. In general you're best off just starting in the strongest possible position to start with, and usually that means splitting the decision making responsibility. If you want to avoid all that hassle, just go the SP route.

In my original comment I made the mistake of saying "any" instead of "all"

[was_boring]

I'm late to the party, but used to work for a collections attorney who specialized in SMB who were close to or are defunct. The biggest mistake anyone ever made (when setting up an LLC) was to mix personal and business funds. It made it trivially easy to go to the court and "pierce the corporate veil" as you so aptly put it.

The way you wan to do it is set up an LLC but then "loan" the business money and act both as it's owner but also it's creditor. This separates you in the eyes of the court.