One of the main reasons to form a limited liability entity or a corporationis to avoid personal liability. When you follow all of the corporate formalities in forming a limited liability entity or corporation, you receive the benefit of limited liability. This means that you have limited personal liability for the company’s debts or other liabilities. However, for every rule there is an exception. In this case, owners, shareholders, or members of a limited liability entity or corporation can be held personally liable if a piercing of the corporate veil occurs.