As the end of another year comes to a close and you are getting ready for your plans for 2021, you may be evaluating are all your assets
Here are many of the common strategies that often turn into costly mistakes (that you may not have considered):
1. All your business ventures in one business. Yes, if you are 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). 2. 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. 3. Business with a partner in the same entity as the 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. 4. Holding safe assets or investments 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). 5. Doing business in the U.S. with your home country entity, not knowing that maybe bringing undue 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 to run for
as early as 2021 as possible.
If you need help to form another entity to protect another business or other assets, call NCP at 1-702-367-7007.
COVID may have greatly impacted your business in 2020.
We are all hoping that 2021 is a much better year for everyone.
January is right around the corner – a time when many traditionally revisit their goals and priorities for the year ahead.
One of NCP’s most important new year goals is to help you be more proactive in launching that profitable new business initiative or creating better protection for your assets.
We’ve found a solution that will help you feel more confident going into 2021 by establishing a complete foundation for your business and personal assets like real estate or investments. The best part is that takes less than 30 minutes of your time!
If you’re looking to form an LLC (most popular) or corporation (no matter what state) , December is the best time to get this done.
Waiting until January can be the most risky and costly approach – here’s why;
• If you wait until 2021, by the time the entity is filed and everything is in place, more than likely you will be operating as a schedule C for two to three weeks of the beginning of the year (assuming you are operating a new business, real estate is different).
• You are risking an audit! There is a $300 Billion tax gap and the #1 culprit is sole proprietors that file a schedule C (that’s why we want to help you avoid that track in 2021, or at least be on it for the shortest possible time).
• We realize that most incorporating services say they incorporate in 24 hours (which may be true but there are additional steps required to establish you business with EIN, banking and more by the first of the year and they all take time. Some states are very backed up with filing and it may take from 5-12 business days up to several weeks for them to process everything.
• Keep in mind at this time of the year; secretaries of state around the U.S. are becoming more and more overloaded with filings (mostly due to budget cuts). This means that even if filing expedited, it can take much longer to form your entity and get a bank account open in time for any end of the year transactions.
Here is some GOOD NEWS!!
We can help but we need you to take the first step to get started. Learn more here.
Even if you’re not 100% certain whether a new entity is best for you or just have a few questions about the process, we can help you make the decision that’s best for your individual needs. If a new entity will not improve your business situation, we’ll let you know with no risk or obligation on your part.
Perhaps this Strategy will be a Big Advantage for You…
Take advantage of immediate tax savings! Sec. 195 of the IRC states that capitalization of start-up expenses (up to $5,000) may now be immediately written off against personal income (S corp and LLC taxed as a flow through).
This ONLY comes into play if you start your business in December.
In most cases, the best option is to incorporate in December but record a January start date on the SS4 for the EIN to avoid a short year return (does not apply to C corps).
As a reminder NCP forms corporation and LLCs in all 50 states, and our goal is to help you launch your business with confidence. We will also help you build business credit and Keep the IRS off your back! Most importantly we have the tools and systems to help your business get off to a fast start to profits.
Also, if you have any partners or referrals that may plan on starting a new company at that time, please have us call them now (we now pay a 10% referral fees).
CAUTION: Avoid forming a $99 corporation or LLC, most of the times they will provide ZERO protection if challenged because it is not a COMPLETE FORMATION.
It’s a safe bet that you started your business to succeed and make money, not add stress to your life and lose money.
To cut to the chase, operating as a sole proprietorship is NOT the fast track to success – in fact, it’s the shortest path to join the 95% of businesses that fail in the first 5 years.
You probably made this choice for one of three logical reasons; (1) you were looking for the easiest and cheapest way to get started, (2) you wanted to test the waters to see if your idea would make money, or (3) your tax advisor told you to keep it simple and go the sole proprietorship route until you earn more than $40K to $50K in profits.
Unfortunately, that decision sends a different message to the rest of the business world:
“I don’t believe in myself, my product or my service, or I don’t expect
to make $40K in profits.”
Forgoing on two decades now, I’ve helped over 6,000 entrepreneurs reverse that message, escape the sole proprietorship trap and make a fast start to profits.
Here are just a few of the strategic insights that woke my clients up to the money they were leaving on the table:
1.Sole proprietors file a schedule C with the 1040 form in April. Schedule C filers are 300% more likely to be audited (the IRS is leaning on small business owners to close a $300 BILLION tax gap). If your business lost money in 2020, you’re especially at risk if you plan to write those losses off against other income.
2. Sole proprietors pay the most in taxes.As the fiscal cliff continues to loom, you already know that your tax bill was going up in 2021. Now is the time to be proactive and help your business save on taxes by forming a separate legal entity.
3. Operating as a sole proprietorship and self-financing your business damages your personal credit score.Sole proprietors frequently turn to self-funding through personal credit cards or cash reserves because their business credit options are limited. The resulting damage to your personal credit score will severely limit your ability to build business credit when you finally get around to forming a separate legal entity.
4. A sole proprietorship sends a negative marketing message.The biggest potential customers, suppliers, and marketing partners all look at your company’s structure before deciding to work with you. Operating this way broadcasts the message that you don’t expect enough profits to incorporate. Why expose yourself to that kind of opportunity cost, especially at a time when you can least afford it.
5. You have unlimited personal liability.A sole proprietorshipdoes not provide you or your family with even a minimal layer of protection in the all-too-frequent event of a lawsuit or other challenges to the assets that you’re working so hard to build.
ESCAPE THE SOLE PROPRIETORSHIP TRAP WITH CONFIDENCE
There’s a way out of ALL of these real-world risks (and others that we don’t even have time to talk about here). NCP has hassle-free solutions in place to quickly and affordably get them all handled – so you can start 2021 with complete confidence.
Go to NCP, my main brand, to help you launch with confidence for 2021. Learn more here.
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 being tied up in the probate courts? Proper estate planning is a must to protect your family’s future).
I’m going to share high-level strategies, ideas, tools, and concepts that will allow your business to achieve its independence and freedom that you deserve.
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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