Costly Mistakes to Avoid as an Officer of a Corporation or Manager of an LLC!

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Forming a separate legal entity is a huge step in separating your personal and business liability. You obtain liability protection with a separate legal entity the day you file the LLC or Corporation.

What most people do not realize is that after day 1 and beyond you are not protected unless you operate the entity as a separate legal entity.

That involves avoiding commingling of funds, proper capitalization and proper minutes and resolutions as your role as the director, officer, shareholder or manager, member or member of an entity.

Typically as a director of a corporation or a manager of an LLC, your liability is limited personally. As long as you operate within your role as the manager of an LLC or director of a corporation. Nevada will protect you as long as you do not commit fraud. Other states have a minimum fiduciary duty or duty of care.

Let me cover for you the biggest mistakes we have seen over the years that have caused unnecessary liability to directors, officers and managers:

Not using your corporate or LLC title
when signing contracts, checks, documents, licenses…followed by the name of the entity. Signing your name without any title or reference to your company may mean that you are representing yourself personally and that brings personal liability to you. You presented yourself as an individual vs. the manager of an LLC. That is a huge mistake.

Continuing to operate as a sole proprietorship even though you have formed a separate legal entity.
This is a big one. This means you are operating a business in your own name, for a month or several months before you formed the LLC or Corporation. Perhaps you filed a DBA name (doing business as) like Marketing Solutions
and the new LLC is Marketing Solutions, LLC and you are still doing business under Marketing Solutions with the bank account in that name under your SSN. That is a huge mistake! Reconnect that DBA name to the new LLC or Corporation. You do that by dissolving the DBA linked to you as the applicant and re-file that same day a new application with the LLC as the applicant. Now the DBA name is connected to the LLC or Corporation for liability and tax purposes.

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Multi-Tiered Structuring Strategies for Maximum Asset Protection

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One of the biggest mistakes I have found over the past 20 years is clients who sometimes have that false sense of security thinking they are totally protected with one legal entity.

Unfortunately, I have seen clients lose control of their companies, their personal assets, and even control of their operating business. The goal is to give you the strategies to plug up any gaping holes you may have in your shield of protection to your current and future assets.

Let’s review the basic’s. The first step is to separate your personal and business assets. That means not operating as a sole proprietorship and forming a separate legal entity like an LLC. Nevada offers an extra layer of protection when it comes to protecting the entity veil and making it harder for someone to come through to your personal assets (assuming you were the owner of the entity).

The next step is to separate your “Safe” from “Risk” assets. Most take the first step to separate their “risk” assets by forming a separate legal entity. Shortly we will cover how to add more separation for your business.

Many forget to form a separate legal entity to protect their “safe” assets, like gold, silver, stock in the stock market (even your cryptocurrency)…where there is no direct liability to you. I believe the reason for this is most think they do not have enough safe assets to protect.

There is no magic number, like once you achieve $100K in safe assets (outside your retirement plan) you need to form a separate LLC. The key question to ask is, “How would you feel if you lost all safe assets to a lawsuit, or action by your creditors?”

If you had $40K of investments unprotected, that may be very important to you, if that is all your safe assets. Also, if you have ownership interest in a business, you may be worth millions, but if you own it personally or by your living trust (which is protected from probate, not liability) you may lose control of that safe asset also!

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You have an 87% Chance of Forming the WRONG ENTITY…

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Which entity type gives you the BEST protection for your business and personal assets? Which one helps you pay the lowest legal taxes now and later? Here are the most common options:

1. Sole Proprietorship

2. C Corporation

3. S Corporation

4. Limited Partnership

5. LLC Taxed as a disregarded entity

6. LLC Taxed as an S corporation

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Incorporate Your Independence from Lawsuits, Taxes and Death

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July is a special time of the year. It is a time for family trips, vacation time, seeing relatives and friends, barbecues, swimming, summer concerts and fun at the cabin!

It’s also the month we celebrate our independence and freedom as a country. So this month of July my goal is to help you maximize your independence in your business from:

  • Lawsuits (Separate your personal and business assets and form an LLC or corporation to protect you and your family from devastating unpredictable lawsuits). Avoid the $99 corporations -which is like buying a car without brakes!
  • Taxes (Operate your business as a business, not a hobby, maximize your meals, travel and entertainment expenses and bullet proof your records from an IRS audit).
  • Death (Will you’re loved ones be protected when you pass on? Will all your assets and all you worked for be tied up in the probate courts? Proper estate planning is a must to protect your family’s future).

I’m going to be sharing with you high level strategies, ideas, tools and concepts that will allow your business to achieve its independence and freedom that you deserve.

Also, if you need support during the month of July with forming a complete foundation for your current business or a new business, you will be able to take advance of our July Independence Special Incorporating Offer that will help you and your business celebrate it’s true independence in the month of July and on.

Remember, to put you and your family in the best position to be independent. Even if you are already financially independent, are all your assets protected from attack? If you are building your financial independence every dollar counts in taxes saved, which may be reinvested to help you grow and expand.

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Watch this FIRST, Before Forming an LLC or Corporation

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If you’re looking to form an LLC or corporation you must watch my BRAND NEW training to help you learn the 5 Essential Components of a Complete Business Foundation.

Why is this so important? Here’s what my friend, Attorney Lee Philips, said about businesses that rely on online articles of incorporation as their only form of legal protection:

“We slice through those in 15 minutes in court and go after the individual every time. That piece of paper provides NO protection!”

This is a direct quote from a legal expert, a counselor to the U.S. Supreme Court who has tried many cases representing plaintiffs. His courtroom experience has shown him that most business owners have no clue what complete formation entails.

Over the last 17 years my company, NCP, has helped thousands of entrepreneurs launch with confidence. Our COMPLETE FORMATION PROCESS ensured that they were starting out with more than just a flimsy piece of paper that provided no protection.

Lee’s comments inspired me to take our training to the next level – we want every NCP client to be CLEAR beyond all doubt what it takes to form a complete and secure business foundation. The result is my  BRAND NEW training called, the 5 Essential Components for a Complete Business Foundationand now you get access to it for FREE (for a limited time).

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Click here to register or get more information: http://budurl.com/LaunchWithConfidence

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