Many times we find that your goal will be to hold assets not in your name, but in the name of a legal entity. But how do you go about it? Well an attorney can help guide you in asset protection.
Bad Entities
Sole Proprietorship
General Partnership
Good Entities
Limited Liability corporations
Limited Partnerships
C-Corporations - Double Taxation
S-Corporations - Flow through
Your attorney and your accountant should work together for best solution. Your CPA will find the best way for you to be taxed and your Attorney will know how to protect your assets.
You can also use debt for asset protection. Your lender would get the first chunk at your equity so debtors may not be able to attach.
As always, talk to your attorney before you get started find out if you can move your assets into business entities.
4 Key Mistakes - When Forming
1. Follow proper legal formalities
Work with an attorney
Operating agreement
Meeting minutes - keep track of business decisions, such as purchases
Keep proper tax records - hire accountant / book keeper
2. Make sure business is adequately capitalized
Keep money in business account to pay operating expenses
3. Avoid commingling of funds
Keep money contributed to business separate
Separate business bank accounts / alter ego doctrine
Get a business EIN Number
4. Act in capacity of owner or member of LLC
Anytime you are doing business with someone else. For example, signing contracts
Anything that your business needs to sign a contract form. For example, sign it as name of LLC, by: John Doe, member