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As far as the debt being with the corporation, if a judge decides the founders acted negligently, s/he can "pierce the veil" of liability and hold them personally liable.

Good to know about the Cali small claims limit.



That's true of all torts, but not paying a consulting contract is very unlikely to be considered a tort; it's a contract dispute --- like, the archetypical contract dispute. The whole point of limited liability is that contract disputes end at the company.


While true that the corporate veil can be pierced in specific circumstances, it is not a common or a likely outcome especially for a contract dispute over an unpaid invoice.

Piercing the veil from my understanding requires you to prove that the primary shareholders fraudulently represented the company, e.g. didn't keep the books separate from their personal finances, commingled personal and business funds, took all the money out of the business to hide it willfully, didn't follow the incorporation documents etc.




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