Piercing the corporate veil is a legal concept where courts hold business owners personally liable for their company's debts and actions. This typically happens when the separation between the business and its owners is blurred, often due to improper practices. To prevent this, it's crucial to maintain the integrity of your LLC or corporation.

1. Maintain Separate Financial Accounts: Ensure that business and personal finances are kept distinct. Commingling funds can lead to veil piercing, as it suggests the business is not a separate entity.

2. Follow Corporate Formalities: Even if you're operating a single-member LLC, adhere to corporate formalities like holding regular meetings, keeping detailed records, and documenting major decisions. This demonstrates that your business is a separate legal entity.

3. Adequate Capitalization: Ensure your business is adequately funded to meet its obligations. Undercapitalization can be seen as an attempt to evade liabilities, increasing the risk of veil piercing.

4. Proper Documentation: Have a clear operating agreement and ensure all contracts are signed in the name of the LLC or corporation. This reinforces the entity's separate status.

5. Avoid Fraudulent Activities: Engaging in fraudulent or deceitful practices can lead to personal liability. Always operate your business ethically and transparently.

By following these steps, you can protect your personal assets and maintain the limited liability that an LLC or corporation offers. Understanding and implementing these practices is essential for safeguarding your business and personal interests.