Piercing the corporate veil is a legal doctrine that lets a court hold a company's owners personally liable for the company's debts or actions, overriding the normal legal separation between a business and the people who own it.
Courts generally look for signs that the company wasn't actually treated as a separate entity: personal and business funds mixed together, no real corporate formalities followed (no separate bank account, no proper records), or the company used specifically to commit fraud or avoid an existing legal obligation.
The entire point of forming a corporation or LLC is the liability protection it provides, and that protection depends on actually treating the company as its own legal entity, not just filing the paperwork once and ignoring it. Keeping business and personal finances separate, and keeping basic corporate records current, is what actually keeps that protection intact.
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