Asset Protection for your Company
To be successful in business, as well as in life, you have to be able to take risks…but you can greatly reduce your risks by utilizing the right asset protection tools.
When you become a target for a lawsuit, the first thing an attorney will do is determine if you have anything worth taking. Most attorneys work on a contingency basis, which means they don’t get paid unless there is something to take. If there are no assets to take, then there would be no benefit for the attorney to take on the case.
“The only way to truly achieve asset protection is to remove the incentive for someone to sue you.”
The first step in developing an asset protection plan is to establish a protective barrier between your personal assets and your business assets. This can be accomplished through the use of a family limited partnership for your personal assets while your separate business entity such as a c-corporation, with or without limited liability company (LLCs), or trust(s) for holding assets, leasing assets, and performing business operations to maximize tax deductions and minimize liability.
Unlike a sole proprietorship where you as the owner are personally liable for the activities of the business, corporations are separate legal entities. Which means the owners and/or shareholders are protected from liability claims directed at the company. Additionally, s-corporations and most LLC are “pass through” entities for tax purposes; literally throwing away thousands of dollars in tax deductions annually).
Incorporating is a Powerful Step in Establishing Your Asset Protection Plan.
A layer of protection can be established by setting up a business entity to maximize tax deductions and minimize liability. A mixture of C-Corporation and LLC’s allow you to do both.
Divide Operations to Minimize Risk
There is a cab company with over 100 taxi cabs. Knowing that it is a high liability business, they have separated out every two cabs into their own LLC. If one LLC were to be sued, then the other revenue generating cabs are protected. A C-Corp oversees operations and leases the cabs to the LLC’s thereby obtaining the greatest tax benefits while limiting liability.
You too can separate your high risk assets from your wealth then split your revenue generating assets from each other, so when sued, your eggs are Never all in one basket. You can use very powerful, effective and legal asset protection entities that have proven effective for decades without falling for the kinds of gimmicks often sold as “asset protection” to the unwary, such as off shore accounts, tax dodges and straw men and corporate shells, “bearer” accounts and stock shares.
For example, you have multiple investment properties. Have them all in your name? You risk everything, BUT place each investment property in its own LLC and you effectively separate and reduce potential liability and Loss.
BUILDING A PLAN
You’ve worked hard to grow your wealth. Don’t you think it’s a smart investment in your future to make sure you can keep it?
You must set up your asset protection plan when your legal seas are calm. You must take action now to move your assets onto safe ground before you are involved in a lawsuit. It’s cheaper, safer, and can be integrated with other goals such as tax reduction and estate planning.Act before it’s too late. If you are named in a lawsuit, it’s too late to protect your assets. In fact, even if you merely suspect you’ve done something for which you can be sued the transfer of assets constitute a “fraudulent conveyance,” and everything you have can be subject to seizure.