Are ALL Your Assets Protected Properly Going into 2019?

Nov 17, 2018 by

As the end of another year comes to a close soon and you are getting ready for your plans for 2019, you may be evaluating are all your assets properly protected?

Protect Your Assets from Risk

Here are many of the common strategies that often turn into costly mistakes (that you may not have considered):

  • All your business ventures in one business. Yes, if you are just starting and testing 3-4 different revenue streams that may be ok in one entity but if two or three are really taking off, why put all of that in one business entity (other than it is easier). Would you put all your investments in one stock? Probably not. Why? Too much risk. The same strategy applies to a business (don’t put all your eggs in one basket).

  • Real estate in your own name (outside your principal residence) even without equity may be a lightning rod for lawsuits, best in a separate entity.

  • Too much equity from real estate in one LLC. Especially if the equity is a high percentage of your net worth. If you have three properties free and clear worth $400K each and that is 80% of your net worth, that makes no sense to have in one LLC. Remember, your living trust does not protect assets from liability.
  • Business with a partner that is in the same entity as your operating business that you own 100%. At the end of the day, you make your partner owner of your main company which may not be what you intended.
  • Holding safe assets or investments (crypto also) outside your retirement plan in your own name/brokerage account or your living trust (remember your living trust provides ZERO liability protection but protection from probate taxes).
  • Doing business in the U.S. with your home country entity not knowing that maybe bringing undo liability to your home country business.

It is a great time to form a new complete entity formation (which we do in all 50 states) as you get ready for the New Year.

REMINDER: In January the Secretary of State’s new business filing process slows greatly, so give your business enough time to get up and running for as early in 2019 as possible.

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Sales Tax Permit Registration Mistakes to Avoid

Oct 28, 2018 by

As an e-commerce seller, you want to avoid sales tax permit mistakes. This is the key part of the process when you are collecting and remitting sales tax is required.  Yes, some states like Washington and Pennsylvania and more coming soon will collect sales tax, but you still need to get registered and file sales tax returns.

Sales Tax Registration Mistakes to Avoid

Avoid these Costly Sales Tax Registration Mistakes-They are Costly

The process to get registered means obtaining a sales tax license or permit to collect and remit sales tax in the states where you have sales tax nexus. Since the June Wayfair vs South Dakota case, you now have to worry about the economic nexus states, in many cases when you sell only 200 units in a state.

We have applied for thousands of sales tax permits for clients over the last several years and we wanted to share some key costly mistakes to avoid.

1. Are You Applying for a Sales Tax or Use Tax Number? Are you an out-of-state seller applying for a sales tax number or an in-state seller applying for a sales tax number? Each state is different. In some states, it is very clear, if you are an out-of-state seller, you are applying for a use tax permit, some states they combine sales/use tax as one option. Every checkbox takes you down a pathway and may come back to haunt you when audited; just make sure you get it right from the start.

2. Not Taking into Account Time Frames. Another huge sales tax permit mistake is not taking into the cost of the time frame. If you are an international seller without an SSN, these states will require you to MAIL in a sales tax application, Minnesota, Texas, and Wisconsin. The challenge, with those three states, is the time frame may range from 2-8 weeks. This means you will continue to pay sales tax, plus penalties and interest out of your own pocket until you have a license to collect. Any mistakes causing a sales tax application to be rejected may take up to 8 weeks before you find out from the state. This is how long a typical rejection letter takes. Apply in early October, or you will pay 10% out of your own pocket when you sales increase 3-5X during November-December.

3. Not Knowing that Many States are a Multi-Step Process. When you apply for a sales tax permit in Florida, you will receive a letter. You can’t create a tax account until you receive that letter. Without a tax account, you can’t automatically remit sales tax. Indiana, Maryland and New Jersey are similar to their process. Connecticut will mail you two letters 10 days after applying. One with electronic options to file, and the second with a PIN, which you will need to access the electronic filing area (like what a bank will send you). This makes it almost impossible for foreign sellers without a U.S. address and scanning service (which we offer).

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U.S. Entity Complete Formation Video and Mistakes to Avoid

Oct 27, 2018 by

If you or someone you know is looking to form a U.S. entity for your global e-commerce business, this video will be a big help.

You will want to watch our new video on our process, tools, support, and packages because you will learn what is really involved in the process and the costly mistakes to avoid will be very clear.

If are still selling on Amazon.com FBA or on any e-commerce platform in the U.S. or looking to protect your assets from your home country with a U.S. entity, our U.S. entity formation video will be very helpful.

U.S. Entity Video

Before forming a U.S. entity watch the video on this page.

Here are some of the big reasons you may want to form a U.S. entity:

Perhaps you have been selling in the U.S. and have never collected or remitted sales tax and you are way behind. You are hoping it goes away but you see that is not likely to happen. That is largely due to the June 2018, U.S. Supreme Court Case, Wayfair vs South Dakota. This case has opened the floodgates for other states to require sales tax to be collected even if you have no physical presence.

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12 Questions to Ask BEFORE Forming a U.S. Entity

Oct 26, 2018 by

These 12 questions below are not only important to ask, but are necessary to get the best answer and support. They apply to all foreign e-commerce sellers looking to establish a U.S. entity. Forming a U.S. company is not as simple as forming a single member LLC with a mail address. There is much more involved. These questions will help keep you on track when working with a U.S. entity provider.

US Company Formation

Ask these 12 questions before forming a U.S. company

  1. Do I Even Need to Form a U.S. Entity as a Foreign Seller?

    This leads to your options to sell in the U.S. as a foreign entity vs the advantages of using a U.S. entity.

  2. How Long will it Take to Form my U.S. Company Correctly?

    You will need to know the factors that will determine the length of time to form your entity, apply for the EIN, establish a bank account, as well as get into compliance with sales tax. Don’t get fooled by “incorporate in 24 hours or less” headlines; these usually lead to costly mistakes.

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The Ultimate Asset Protection Structure to Protect Your Net Worth

Oct 3, 2018 by

Lawsuits are at an all-time high. Over 80 million lawsuits per year!  The more that people struggle the more they are concocting ways to extract your wealth from you. Perhaps you may not feel you have a lot of wealth, but to others, you may appear rich. Your insurance policies are like blood in the water that the sharks can smell from a mile away!

Make sure your assets are properly protected.

Don’t fall prey to thinking; no one has sued me yet, so why do I need to take these extra steps? My question to you is simple. What is your current risk tolerance given your age and net worth? Can you afford to start over? I have known many have had to do that since 2008.

Keep in mind, simple vs. asset protection is inversely related. Meaning, those are successful, rarely have all their assets in one legal entity. Why? If that entity were to be sued you could lose all the assets in that one entity! Perhaps you will be protected personally, but your business may be gone.

Let’s assume, you are thinking, “Ok, Scott…I want to protect everything, how do I do that”?

Let’s take a look at what that structure would look like.

  1. A separate legal entity for your main operating business. That may be a corporation or LLC.
  2. Another separate legal entity to separate your business into two parts. If you are brand new this is not
    necessary. But if you have been in business for 20 years in one legal entity, that means one lawsuit could cause 20 years of business to go down the tubes. You may want to split up your product lines or services. If you do seminars that may be a different entity from your information product business.
  3. If you have a business with partners and operate through LLCs, each partner should own their
    membership interest in their own LLC, not individually. Why? The LLC has the charging order protection that makes it more difficult for someone to come after the owner of the LLC, which is great. When you have partners, even with the charging order, you do not want any disruptions if the owner is sued for something unrelated to the operating entity. A second layer LLC will prevent that from happening.
  4. A separate legal entity for each piece of real estate you own (your primary residence will be a different
    approach). If you own rentals in Wisconsin where you can buy a house for $40K, you may not need a separate LLC for each piece of real estate. In California, the same house may be $930K. In that case, a separate LLC may make sense. California has an $800 per year franchise tax fee so you may consolidate based upon that fee.
  5. A separate LLC for your safe assets. That includes investments in the market, gold, silver, ownership in other
    companies (like any C corporations). Any entity taxed as an S corporation, there are limits on who may be the
    shareholder, only a single member LLC can be a shareholder. NEVER have your safe asset LLC be the
    owner of a risk asset, like real estate or a business.
  6. A separate LLC for your domain names. Domain names are virtual real estate free and clear. They may become quite valuable over time. If owned by your main operating company and that is sued, you could lose control of your most valuable asset.
  7. A personal residence trust for your home. If you have equity that is not covered by your state homestead laws, this may be the best option to protect your equity and not have the negative consequence that placing your residence in an entity would entail. Attorney Rob Bolick is a great resource and referral partner with NCP and covers more details about the personal residence trust.
  8. A life insurance trust for your life insurance policies. This is part of the estate planning for your estate. Life insurance is not subject to income taxes but is subject to estate taxes and that is why the life insurance trust is a must. Attorney Rob Bolick, an attorney in Las Vegas would be a great resource for this as well. His number at his law firm is (702) 690-9090.
  9. A Nevada Asset Protection Trust. This is like having an offshore trust onshore. It would be the owner of your LLCs and the living trust would be the beneficiary of the Nevada Asset Protection Trust. Nevada has a two-year statute of limitations and when two years go by you are home free from almost all creditors. Attorney Rob Bolick is the resource for this also.
  10. A living trust. Estate planning is very important and most Americans do not have a living trust established. This will help pass your assets to your heirs and avoid probate when properly funded.
  11. An offshore entity. This is the top asset protection tool because the entity is in another country with different rules than the U.S. There are NO tax benefits to an offshore entity. The U.S. person would need to pay all taxes associated with it. The IRS is all over this type of entity, so again, just to be clear, you must pay all taxes as a U.S. citizen.
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