Can I Be Sued Personally If I Have an LLC in Minnesota?

If you own a Minnesota LLC, you’ve probably asked yourself this question at some point:

“If my business gets sued, can they come after me personally?”

It’s one of the most common concerns I hear from Minnesota business owners. You form a limited liability company because you want protection. You want to separate your business risks from your personal assets. You want to ensure that if something goes wrong, your home, savings, and family’s financial security are not at risk.

The good news is that a properly structured and maintained Minnesota LLC is designed to provide that protection.

The important part, however, is that protection is not automatic and is not absolute.

How a Minnesota LLC Protects You

Under Minnesota law, a limited liability company creates a legal separation between the business and its owners (called members). In most cases, if the LLC is sued for a business debt or obligation, only the assets owned by the LLC are at risk. Your personal bank accounts, home, retirement funds, and other personal property are generally protected.

That separation is what “limited liability” means.

For many Minnesota small business owners, this protection is critical. It allows you to take calculated business risks without putting your entire personal financial life on the line.

But courts in Minnesota will only respect that separation if the LLC is treated as a separate legal entity in practice, not just on paper.

When You Can Still Be Sued Personally in Minnesota

Although a Minnesota LLC provides strong protection in many situations, there are circumstances where personal liability can still arise.

1. You Personally Guarantee a Business Debt

Many banks, landlords, and lenders in Minnesota require personal guarantees, especially for small or closely held businesses. If you sign a personal guarantee for a commercial lease, line of credit, or business loan, you are agreeing to be personally responsible if the LLC cannot pay.

In that situation, the lawsuit is not about “piercing the corporate veil.” You have voluntarily accepted personal liability by contract. If the business defaults, your personal assets may be at risk.

Before signing any personal guarantee, it is important to understand exactly what you are agreeing to.

2. You Commit Personal Negligence or Misconduct

An LLC does not shield you from liability for your own actions. Under Minnesota law, if you personally engage in negligence, fraud, misrepresentation, or other wrongful conduct, you can be sued individually.

For example, if you personally cause injury to someone while performing business activities, or if you personally make false representations in a contract, you may face individual liability. The LLC protects you from business debts and obligations, but it does not protect you from your own misconduct.

3. A Minnesota Court “Pierces the Corporate Veil”

Minnesota courts have the authority to “pierce the corporate veil” in certain circumstances. This is a legal doctrine that allows a court to disregard the LLC structure and hold the owner personally liable.

Veil piercing is not common, but it can happen when business owners fail to treat the LLC as a separate entity. Courts may look at factors such as:

• Commingling personal and business funds

• Failing to maintain separate bank accounts

• Inadequate recordkeeping

• Undercapitalizing the business

• Using the LLC to commit fraud or injustice

If a court determines that the LLC was merely an alter ego of the owner, it may allow creditors to pursue personal assets.

For Minnesota business owners, this is often where problems arise, not because the LLC was formed incorrectly, but because it was not maintained properly over time.

4. You Sign Contracts Incorrectly

Another common issue arises when business owners sign contracts in their personal capacity instead of clearly signing on behalf of the Minnesota LLC.

For example, signing simply “John Smith” instead of “John Smith, Manager of ABC Properties, LLC” can create ambiguity. In some cases, that ambiguity can open the door to arguments that you intended to be personally bound.

This may seem like a small technical detail, but in litigation, details matter.

Are Single-Member LLCs Protected in Minnesota?

Many Minnesota entrepreneurs operate as single-member LLCs. A common concern is whether single-member LLCs offer less protection.

Minnesota law recognizes single-member LLCs and generally affords them the same limited liability protection as multi-member LLCs. However, because there is only one owner, courts may scrutinize the separation between personal and business affairs more closely.

If you operate a single-member Minnesota LLC, it becomes even more important to maintain separate finances, keep accurate records, and avoid treating the LLC as merely an extension of yourself.

The Real Risk: False Confidence

One of the biggest risks I see among Minnesota business owners is a false sense of security. Many people form an LLC online, file the paperwork with the Minnesota Secretary of State, and assume they are fully protected.

But they never create a properly drafted operating agreement. They mix business and personal expenses. They fail to document major decisions. They sign contracts without reviewing liability provisions. They do not carry appropriate insurance. They never revisit their structure as the business grows.

The LLC becomes a formality rather than a functioning legal structure.

When a lawsuit arises, that is when the weaknesses become visible.

How to Strengthen Your Personal Protection

If you want your Minnesota LLC to truly protect you from personal liability, you should consider:

• Maintaining strict separation between business and personal finances

• Keeping accurate corporate records and documentation

• Using well-drafted contracts tailored to Minnesota law

• Limiting personal guarantees whenever possible

• Ensuring your operating agreement reflects how the business actually operates

• Integrating your business structure into your broader estate and succession plan

An LLC is not a magic shield. It is a legal framework. And like any legal framework, it must be built and maintained properly.

Final Thoughts for Minnesota Business Owners

So, can you be sued personally if you have an LLC in Minnesota?

In many cases, no. A properly structured and maintained Minnesota LLC provides strong protection against personal liability for business debts and obligations.

However, that protection has limits. Personal guarantees, negligence, improper recordkeeping, and veil piercing can all expose you individually under the right circumstances.

If you are unsure whether your LLC is structured correctly or whether your personal assets are truly protected, it is far better to review your structure proactively than to discover a problem in the middle of litigation.

For Minnesota business owners who want clarity and peace of mind, a periodic legal review of your LLC structure can help ensure that your protection is real, not just assumed.

Do I Need a Business Attorney?

If you need help with your LLC, or have other business legal issues you are confronting, let's schedule a Legal Strategy Session online or by calling my Edina, Minnesota office at (612) 294-6982 or my New York City office at (646) 847-3560. My office will be happy to find a convenient time for us to have a phone call to review the best options and next steps for you and your business.