When Can a Business Owner Be Held Personally Liable in Florida?

One of the main reasons to form an LLC in Florida is to separate the business from the owner’s personal assets. If the company incurs a debt or becomes involved in a dispute with a contractor or other party, claims are generally made against the company itself rather than against the owner’s home, vehicle, or personal bank accounts.

This general rule is established in Florida Statutes § 605.0304. A member or manager of an LLC is not personally liable for the company’s obligations simply because that person owns or manages the business.

However, having an LLC does not eliminate the possibility of personal liability in every situation.
Sometimes liability arises not because the LLC’s protection has somehow “disappeared,” but because the owner has personally undertaken a separate obligation or has personally engaged in conduct for which the law imposes individual responsibility.

A Personal Guaranty Changes the Situation

This is one of the most common situations. A company may lease commercial space, obtain bank financing, or purchase equipment through an installment agreement. The LLC is formally the party to the contract, but the owner may also sign a personal guaranty.

If the business stops making payments, the creditor does not need to prove that the LLC was improperly used. The creditor has a separate obligation directly from the owner.

For example, a lease may be entered into in the company’s name, while a separate provision allows the landlord to pursue the individual who personally guaranteed the payments.

That is why reviewing a commercial agreement requires more than checking which entity is named as the contracting party. It is equally important to understand what the owner is signing in an individual capacity.

When a Court May Pierce the LLC’s Protection

A more complicated situation involves what is commonly known as piercing the corporate veil.
In Florida, poor recordkeeping or organizational mistakes alone are generally not enough. In fact, § 605.0304 expressly provides that failure to observe company formalities, by itself, is not a basis for imposing personal liability on an LLC member.

The approach taken by Florida courts is well illustrated by Dania Jai-Alai Palace, Inc. v. Sykes. Significantly more serious circumstances are generally required before a court will disregard the company’s liability protection.

For example, the issue may arise when a legal entity is effectively used as an instrument for fraud or another improper purpose and a creditor is harmed as a result.

This means that the mere fact that an owner transferred money between personal and business accounts or failed to maintain perfect internal documentation does not automatically give a creditor access to the owner’s personal assets.

The situation is different, however, if the company was created or used to conceal assets, avoid obligations, or carry out other improper conduct.

An LLC Does Not Protect an Owner From Personal Misconduct

There is also a simpler principle. Limited liability applies to the obligations of the company. It does not shield an individual from responsibility for conduct that person personally engaged in.

Consider a situation in which a customer enters into a contract with an LLC, but the owner personally provides information that the owner knows is false in order to obtain the customer’s money. In that situation, the potential claim may involve not only the company as the contracting party, but also the individual who allegedly committed the wrongful act.

The same principle can apply to other unlawful conduct for which the law imposes personal liability.
An LLC should therefore not be viewed as a universal barrier between a business owner and every possible legal claim.

Distributions of Company Funds Can Also Create Problems

Payments and distributions to LLC members require separate attention. Florida Statutes § 605.0406 restricts distributions when, after the distribution, the company would be unable to meet its obligations or its financial condition would otherwise fail to satisfy the requirements of the statute.

If a member or manager approves a prohibited distribution in violation of applicable duties, that person may face a claim requiring repayment of the relevant amount.

This issue becomes particularly important when a business is already experiencing financial difficulty. A decision to distribute company funds to its owners at that point cannot always be treated as merely an internal business matter.

What Changed With Protected Series LLCs

As of Jul 1, 2026, Florida law allows Protected Series LLC structures. This structure makes it possible to establish separate series within a single LLC, with their own assets and liabilities. When the statutory requirements are satisfied, the liabilities of one protected series generally should not automatically become liabilities of another series or of the LLC itself.

This may be useful for businesses that manage several distinct assets or business activities. One example is an owner who holds multiple real estate properties through a single structure.

But the liability protection still depends on proper implementation. The law requires appropriate separation of records and proper identification of the assets associated with each series. Simply referring to different business activities as separate “series” is not enough.

When Should a Business Owner Be Concerned About Personal Liability?

A properly formed and properly operated LLC provides meaningful protection to its owners. A company debt, by itself, does not mean that a creditor can automatically collect from the business owner personally.

The risk usually arises when there is an additional legal basis for personal liability. That may include a personal guaranty, the owner’s own wrongful conduct, improper use of the company, or violations involving distributions of company funds.

When a dispute has already developed, the analysis should therefore begin not with the general question, “Does my LLC protect me?” but with the documents and the specific conduct involved.
What did the owner sign personally? How did the debt arise? Who engaged in the conduct that led to the claim? How were company funds handled?

The answers to these questions often determine whether the dispute remains limited to the LLC or whether claims may also be asserted directly against the business owner.

A Florida business attorney can review contracts, corporate documents, and the circumstances surrounding a dispute to evaluate the risk of personal liability before the matter develops into a more serious legal conflict.