A lot of growth-stage business owners do exactly the right thing: they form multiple LLCs to keep their businesses separate. One entity for the main operation. Another for a second venture, a side brand, a real estate holding, a consulting practice. Smart move — in theory.

Here's the problem: forming the LLCs is the easy part. What actually protects you is how you operate them after the paperwork is signed. And most business owners — even careful ones — make habits that quietly undo the protection they paid to create.

Here are the risks that don't get talked about enough.

The First Risk: One LLC Can Be Held Liable for the Other's Debts

Louisiana recognizes a legal theory called the Single Business Enterprise doctrine.

Under this doctrine, a court can treat two separate business entities as if they were one. When that happens, the assets of one entity become available to satisfy the debts of the other.

Courts apply an eighteen-factor test. No single factor is decisive — the totality of circumstances controls. But the factors courts look at include:

• Do the entities share common ownership and management?
• Are they presented to the public as one unified operation?
• Do they share websites, email addresses, or branding?
• Are their finances kept separate?
• Can the outside world tell them apart?

If you are running two LLCs but presenting them as one brand — same website, same email signature, same social media — you are answering most of those questions in the wrong direction.

The practical result: a judgment against LLC #1 can be collected from LLC #2's assets. The separation you paid to create doesn't exist.

The Second Risk: You Can Be Held Personally Liable

The Single Business Enterprise doctrine targets other business entities. But there is a second theory — alter ego liability — that targets you personally.

Under alter ego, a court can pierce the corporate veil and hold the owner personally responsible for the LLC's debts.

To get there, a plaintiff needs to show that the LLC is not really a separate entity — that it is just you operating under a name.

The evidence they look for:

• Commingled personal and business funds
• No separation between you and the entity in public-facing communications
• Failure to observe basic formalities — separate accounts, separate contracts, separate identity

Here is what most owners don't realize: every email you send is evidence.

If your signature presents two LLCs as one unified operation under your personal name, that is a timestamped record — created by you — that the entities were never truly separate. In discovery, opposing counsel requests those emails. All of them.

The Mistake That Shows Up Most Often

It's the email signature.

It looks something like this:

Jane Smith | Business A · Business B businessA.com | businessB.com

It feels like efficient branding. It feels like you're making the most of every communication.

What it actually does is hand opposing counsel the argument that both entities are one operation — and that you are personally the business.

Websites do the same thing when they cross-reference each other as the same brand. So do social media bios.

A Recent Change in Louisiana Law

Here is some good news for Louisiana business owners.

La. Rev. Stat. § 12:1705, effective August 1, 2024, limits when courts can disregard the separate legal identity of a business entity.

Two things matter:

First, the statute makes it harder — not easier — to use the Single Business Enterprise doctrine to reach one LLC from another.

Second, it includes a safe harbor. Certain circumstances, standing alone, cannot justify disregarding corporate separateness. One of them: that entities "control one another or are under the common control of the same person or business organization."

Under the old doctrine, common control was one of the eighteen factors courts weighed against you. Under the new statute, it is not enough on its own.

The catch: timing matters.

The Louisiana Supreme Court held in Munson v. Heniff Transportation Systems, LLC (December 2025) that § 12:1705 applies prospectively only — meaning it covers conduct on or after August 1, 2024.

Conduct before that date is still analyzed under the old judicially-created doctrine and the full eighteen-factor test.

What this means practically:

• Disputes involving conduct before August 1, 2024 — old rules apply
• Disputes involving conduct after August 1, 2024 — new statutory protections apply, including the safe harbor for common control

What Actually Maintains the Protection

The separation has to be real — and it has to show up in how you operate every day.

Separate identities. Each entity has its own name, its own email address, its own signature, its own web presence. When you are acting as Entity A, you sign as Entity A. No mention of Entity B.

Separate finances. Each entity has its own bank account. Revenue goes to the entity that earned it. Nothing runs through your personal account.

Separate contracts and invoices. Every agreement clearly identifies which entity is the party. No ambiguity.

Consistent habits over time. One clean quarter doesn't undo two years of commingling. Courts look at the totality of how the businesses were operated.

When a Claim Is Already Active

If you are already dealing with a legal dispute involving one of your entities, the urgency goes up.

Opposing counsel will look for evidence that the entities are not real — because finding it dramatically expands who they can collect from.

A cease and desist letter, a demand letter, a lawsuit — any of these should trigger an immediate review of how your entities are presenting themselves to the world.

The Takeaway

Forming two LLCs is the right move. But the paperwork alone does not protect you.

The protection comes from how you operate after the filing is done. And the habits that erode it — combined branding, shared signatures, commingled finances — are easy to fall into without realizing the risk you're creating.

If you have multiple entities and you're not sure whether your day-to-day operations are holding up the separation, that is worth reviewing before a dispute makes it urgent.

Amanda Butler is the founder of Business Law Group, a boutique business law firm focused on growth-stage businesses. This post is for general informational purposes and does not constitute legal advice. Questions about your specific situation? Schedule a consultation today.