Asset Protection EntitiesOne of the biggest problems facing anyone starting up a business, or working a business, is the danger and threat of litigation. Law suits, especially frivilous law suits, should be the concern of every business owner, whether operating a small, one person business, or a company with a lot of employees. The fact is, unless an individual understands the laws governing asset protection, that is, the separation of business and personal assets, their personal property and possessions may well be subject to a business law suit. Four types of entities, two becoming ever more popular, are listed below. |
Understanding Entities
THE LIMITED LIABILITY COMPANY. Commonly called an LLC, this business entity has become the staple of small businesses, entrepreneurs, investors, and independent contractors, such as real estate and insurance salesmen, brokers, mortgage houses, and other small business men and women. The Limited Liability Company combines the personal liability protection of a corporation with the tax benefits and simplicity of a partnership. In addition, they're more flexible and require less ongoing paperwork than corporations. And best of all, they help the small independent businessman and entrepreneur isolate personal assets from business assets in ways a DBA or Sole Proprietorship cannot. LLCs are considered by many as the best of two worlds: pass-through taxation and asset protection. See more on LLCs. THE SERIES LLC. Available at the present time in only seven states (Delaware, Illinois, Iowa, Nevada, Oklahoma, Tennessee and Utah), the Series LLC is destined to become the biggest and best entity for certain types of multiple entity businesses, such as property developers, investors, and businesses not wanting to mix assets from several different endeavors or enterprises. To qualify now, or in the future, the Articles of Organization and the Company's Operating Agreement must make provision for the Series LLC, even if it is not available or needed at the time of company formation. THE CORPORATION. Incorporating is one of the best ways a business owner can protect his or her personal assets. Most people choose to incorporate solely for this reason, but there are other advantages as well. For example, the corporate business structure saves you money in taxes, provides greater business flexibility and lets you more easily raise capital. The advantages also include greater flexibility in developing benefits, income distribution, and distribution of assets. The disadvantages include double taxation (corporate profits are taxed, as are the distribution of income to shareholders after being taxed at the corporate level), tighter regulations on how the company can be run, and distribution of stock. See more on Corporations. THE SEASONED OR SHELF ENTITY. Previously formed companies are known by a number of terms; such as shelf or shell (usually refers to publicly traded) or aged or seasoned or previously formed companies. Irrespective of the term, a seasoned company offers unique opportunities. Perhaps the leading reason for acquiring an aged entity in general is credibility. Before anyone will consider your business expertise, ability, and experience, most business relationships are heavily influenced by the length of time a company has been in existence. This is often true when establishing financial and client/vendor relationships. When start-up businesses like Yahoo, Google and Go-Daddy first opened their doors, who would have considered lending them money or recommending their product--but today, these giant businesses expect and get loans, special treatment, and wide-spread business approval. See more on Seasoned Companies Interested in talking to one of our high-qualified staff? Email us at CONTACT US |
