Tag: LLC

7 Important Reasons to Form a Corporation or LLC for Your Business.

Are you operating your business as a real business or as a hobby? It’s time to make your business OFFICIAL before the summer push for business!
Let me ask you two important questions:

  1. Are you operating your business under your own name, a DBA or fictitious firm name, basically as a sole proprietorship or maybe as a general partnership? AND/OR
  2. Are you or your family at risk because of business or personal assets that are unprotected from unexpected losses or legal issues?

Sole Props Are Rolling the DiceIf you answered YES to either question, please read on for important news about why NOW is the time to form a corporation or LLC for your business.

  1. Make it Official. Operating as a sole proprietorship or general partnership sends a message that you are still “testing” your business or that you’re not sure you’ll really make it.

    Perhaps your accountant told you that incorporating is an unnecessary expense or that it won’t help you save on taxes due to an expectation of low profits.

    This is the WORST marketing message you can send when you want to attract new clients and partners to your business, who want assurance that you’re about your business and here to stay.

  2. The Law of Attraction. You get what you focus on. Testing, hoping, and “seeing if things work out or not” BEFORE you decide to step-up and make your business official by incorporating broadcasts a clear message to the universe that you’re not really serious about your business or committed to a positive outcome.

    The Law of Attraction states that the universe returns not what you wish for but what you program into your deepest belief system through your dominant thoughts, actions, and feelings. Making your business official and really stepping up says, “I am ready to receive!”.

  3. Limited Personal Liability. You may be thinking, “I already lost everything during COVID” and still recovering.

    If you’re one of the few that managed to survive and grow your assets since then but are still holding them in your own name, you’re playing a VERY RISKY game (similar to those with assets in unstable European banks).

    Even if you don’t have any assets right now, a lawsuit or judgment will destroy any credit you are looking to build in the future PLUS. You may be looking over your shoulder for years, waiting for someone to come after you when you finally do start to turn things around. That’s no way to live your life.

    One lawsuit from an unprotected business can ruin your chances of getting a personal auto loan or refinancing your home.

    Good people who “play by the rules” can still be sued for the most unexpected reasons. You may be thinking, “my business insurance will help me out,” but are you really covered?

    Even if your business is never sued, what if you’re unable to pay a vendor, and they come after you? Do you want to be personally liable? Put a halt to greedy people looking to take what you have worked for!

    This is the best time to form an LLC or corporation to limit your personal liability.

  4. Reduce Your Taxes. The bottom line is that operating as a sole proprietorship will cost you the most in employment taxes (up to 15.3% on earned income up to $137,700 in 2020).

    That means that your income will be taxed as the HIGHEST possible TAX RATE as a sole proprietorship.

    By the way, filing a Schedule C (the form filed for earned income from a sole proprietorship) also means that your business is among those MOST LIKELY TO BE AUDITED.

    Why? The IRS has a $300 BILLION tax gap, and they believe the biggest tax cheats are the little business owner like you. Why?

    Their stats show them that sole proprietorship is MOST likely to UNDER report their income and OVER report their expenses (two big no-nos with the IRS).

    Operating as an S corporation or LLC taxed as an S corporation in many situations is a much better approach for two reasons.

    You will have part of your profits as distributions which are NOT subject to the 15.3% employment taxes AND move that profit to schedule E, not schedule C, which is more likely to be audited!

  5. Access More Funding Options. Operating as a sole proprietorship or general partnership limits you when it comes to funding options.

    You are also DAMAGING YOUR PERSONAL CREDIT SCORE by operating this way. How do you finance your business as a sole proprietorship? You use your PERSONAL CREDIT cards, which will drive up your revolving debt, which will drive your personal credit score!

    When you form a corporation or an LLC, you will SEPARATE your PERSONAL and BUSINESS CREDIT. Yes, any cash funding with a personal guarantee will come into play, but that DEBT does NOT show up in the personal credit bureau, which is HUGE for future funding!

    As you form a new LLC or corporation, NCP will help (if you choose) to build your business credit scores quickly and get your business in a position to secure funding to grow. But the first step is to form a separate legal entity.

  6. Simply Your Life. Yes, in fact, operating as a sole proprietorship will complicate your life, not the opposite.

    Separating your business and personal life will make it much easier for you to navigate both from a financial and legal perspective.

    Now you will have each in its own compartment where it belongs to protect your overall success.

  7. Asset Protection. Forming an LLC for your safe assets like investments (those outside a retirement plan) will help you sleep better at night knowing you don’t have all your “eggs” in one basket.

    If you are using a LIVING TRUST to protect your assets, that will NOT work, and everything in your trust may be vulnerable. Do you own other businesses that really should be operating through a separate bank account in a separate entity?

    Do you own real estate in your own name that may be sending a message that you are rich and have assets worth taking? Have you been in business for years, or are you operating more than one business in one entity?

    Are you doing some business with a new partner and making the big mistake of running that revenue through your current business? Avoid these costly mistakes and form a separate company for that separate business.

Do you need support in forming a corporation or LLC? Not sure what entity or state is best?

Call Nevada Corporate Planners, Inc. at 1-367-7373,  the company I founded. We incorporate in all 50 states and have amazing support and turnkey packages to help you build business credit and help keep the IRS off your back!

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Entity Structuring Fundamentals

Anytime you form a separate legal entity for a business or protect safe assets, it is very important to complete the entity structuring fundamentals.

When an entity is formed, you should be very clear on the best structure to support your goals, both short- and long-term.

For example, a C corporation may have lower tax brackets than you or I do personally, AND you may pay fewer taxes in year one, but it may be the WRONG structure for your results in years 2, 3, 4, and so forth.
which state is best to incorporate

If you are not looking to retain earnings in the company and grow and expand with infrastructure and overhead, it may be the wrong entity for your business.

If you are forming an LLC, you should know how the LLC is taxed and managed by managers or members. There is a big difference, especially with how the LLC is taxed.

To select the best entity, keep in mind that you must approach it from two main points of view: the best entity from a tax point of view and the best one from a legal point of view.

After you are clear on your goals, both short- and long-term, it is time to form the entity.

You want to be clear on who is the initial director if a corporation or manager/member, if an LLC. After forming the articles of organization or articles of incorporation (for a corporation), your next step is to open a bank account and capitalize on the new entity.

This seems simple, but so many people open an LLC bank account with a check with revenue and never properly have the owners capitalize and put money into the account in exchange for ownership in the company.

If you are the entity owner, you should be the one putting money (or service or equipment) into the company in exchange for an ownership interest.

If you have another entity that is the owner, that entity will put money into the operating company in exchange for an ownership interest.

If you have a partner and are not going to put in capital to match your ownership percentage and one is going to contribute services, that may be a taxable event (check with your CPA).

In other words, if you get a 50% ownership in a business with no money in exchange for your labor (sweat equity) and your partner puts in $50K for their 50% ownership, the IRS looks at this as if you obtained $50K in value and would owe taxes on the $50K.

In that situation, are you able to say of the $50K, $45K was a loan, and therefore if your partner put in $5K, then there is no tax issue. That is correct, but now you have a totally new situation where the business will need to pay back the $45K loan out of profits before either partner is paid any profits.

Next, you have to ensure that if you were operating as a sole proprietorship before or a general partnership now, you actually make a complete transition to that new entity when you form the entity.

Over the years, I have seen too many people still operating as sole proprietors, even though they have formed an LLC.

How is this possible?

Several mistakes are when you don’t open a new bank account in the name of the LLC or corporation and keep operating under the bank account in your name as a sole proprietorship.

The other big issue is if you have a DBA or fictitious firm name linked to you personally and you form the separate legal entity and forget to reconnect the DBA name to the NEW entity – that is a big mistake.

Corporate and LLC formalities are a must (even if you incorporate in Nevada).

A corporation and an LLC are separate legal entities from you and me personally. They can do everything you can do except act and think. They do that through minutes, meetings, and resolutions.

This is the documentation for major decisions made by an entity such as adding a shareholder, changing the officers or managers, leasing real estate…Some falsely believe that LLCs are “easier” because they do NOT require the same formalities corporations.

When we did our research years ago looking at what judges actually do, we found they expect to see the same corporate formalities that apply to corporations.

That means an LLC will need an operating agreement, minutes, meetings, and resolutions for major decisions, membership certificates, and a membership ledger to track the owners.

This is all part of protecting both the LLC and corporate veil. If someone is going to sue your entity and do not operate it as such a legal entity, you MAY be personally liable.

The final big step to ensure your entity is structured properly is to make sure your taxes are being paid properly. That starts with knowing how your entity is taxed and the responsibilities with that.

If the entity is an LLC taxed as an S corporation, you will probably have some payroll required at some point in the year, even if to pay yourself.

If you have an LLC taxed as a partnership, you will realize that you will not be paid a salary if you are one of the LLC members. You may be paid a “guaranteed payment,” which is similar to but not a W-2.

It is very important to make sure that you work with a good tax team to keep you on track with your business entity.

Making sure your entity complies is a very important step in the process to build and protect your wealth! Take the time to create an action step or two, so you keep moving forward in your business and towards success!

If you need support with forming a new LLC or corporation, contact my company NCP at 1-702-367-7373. We incorporate in all 50 states and have amazing support to make it an easy experience for you.

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

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
7. LLC Taxed as a C Corporation
8. LLC Taxed as a Partnership

With a minimum of 8 options, there’s at least an 87.5% chance the one you choose is wrong for your business.

That can lead to costly and time-consuming problems that can threaten the survival of your business. Why guess when it comes to protecting everything you’ve worked for?

The conflicting answers you get from paid professionals like attorneys, accountants, or tax planners can often be as misleading as guesswork. Good legal advice might have adverse tax implications.

Choosing your tax position alone might leave your intellectual property at risk. You may be as frustrated as I was trying to get a clear answer that considers your whole business and addresses the big picture.

Unfortunately, most entrepreneurs don’t find out that they’ve made the wrong choice until AFTER they lose assets in a business or personal lawsuit or get decimated by the IRS in an audit.

The exposure is just as risky whether you’re just starting or worth $25 million or more. I’ve consulted with thousands over the years and seen virtually every mistake in the book.

Yes, some do get lucky and get away with the wrong structure, but even if they escape an expensive lawsuit, most have no clue how much they’ve wasted over the years in overpaid taxes.

If your business’s future matters to you, it’s time to STOP guessing and educate yourself with my authoritative and field-tested training. It’s called “Discovering which Entity and State are Best to Protect You and Your Business,” and I’m making it available to you absolutely free… not because this course doesn’t offer measurable value…

(Frankly, my consulting clients gladly pay hundreds of dollars for this kind of information… heck… many professionals prizes this incorporation road map simply because it boosts their confidence and credibility in front of their own clients.)

I love helping people sleep better at night, knowing that their assets are safe and their families are protected. Many times all it takes is one or two little shifts to make all the difference between keeping your wealth or losing all of it.

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The Asset Protection Mindset

A strategic asset protection mindset will separate those who accumulate long-term wealth and keep it. Most successful entrepreneurs let their big egos get in the way, and they don’t take steps to set up a complex (not simple) structure to protect their assets.

A strategic asset protection mindset is part of this important business equation; you must master two skills: first, the skill to generate profits in the shortest period possible and keep them. Many times, keeping them may be harder than creating profits.  Keeping them focuses on the strategy of asset protection. You must protect your assets from everything, like lawsuits, taxes, creditors, and bankruptcy. 

This success requires a certain mindset for survival. It requires working backward to think through what could go wrong and how your assets would be affected.

You Must Ask Tough Questions

It requires asking some tough questions like, “What would happen if I get sued, and my business insurance (if your business even has any) did not cover the legal fees and damages? What would happen to my financial fortress? If my assets were to take one direct hit (a lawsuit), what would be the outcome?  Would I lose everything? How do I mentally handle being totally unprotected?”

Perhaps you have formed a separate legal entity for your business, and a hit at the business level should protect you at a personal level. How do you handle a lawsuit at your business-level where the business has to pick up the tab?

Does Your Business have the Cash Flow for Legal Expenses?

Could your business survive defending a lawsuit that would require a retainer of $20K and $3K a month for 18 months? What would that do to your cash flow? Is there even enough cash flow to handle that extra monthly overhead?

What about an IRS audit? Is your business being operated as a business, not a hobby? What would the IRS discover if they looked at your records? Would there be large holes and gaps in the business records which would lead to huge penalties and interest? How would you and your business handle such an attack?

Here are the key attributes of the asset protection mindset for survival:

  1. Consider the downside first.  If you were in the business of setting up firework shows, you would take every precaution and consider what could go wrong to determine the best safety so that no one would be hurt. Are You Negative or Smart?
    But in most businesses, it could be considered being negative to consider what can go wrong.

    I know you do not want to spend all your energy in this space, but it has a vital role in stepping into the consideration as part of your survival plan.

    Do You Have a Partner? Business is like Marriage…

    This is a must, especially if you have a business partner. You must consider if there is no cash flow to pay yourself, who will personally guarantee the accounts? What legal issues can you create for each other, and how will you avoid them?

    In most businesses, the founder gets so excited (similarly to how you feel before getting married) about their great idea and how much money it could generate, how their life would be different…that if you enter the conversation with a point of what could go wrong, or what if that does not work out…you would be considered negative and unsupportive of the idea.

    Keep in mind that being positive and excited has its role and is the genesis of most great businesses. At some point, ideally, in a separate meeting, the downside must be considered.

    I mean, consider it first, before you open your doors, sign the big lease, and commit your capital. Not that you have to consider everything that could go wrong when an idea comes into your mind, because you would never get started, in that case (that is an entirely different issue).

    Want Results? Model Walt Disney’s Approach

    The best approach is to model Walt Disney. Walt would conduct a separate meeting to create ideas (the dreaming room) versus evaluating the ideas.

    This was key to separate them because the creative and open-ended thinking phases were not the time to evaluate an idea to determine if it would work. That would more than likely stifle the ideas in the first meeting. The same approach works well when it comes to evaluating the downside of a business opportunity. Have fun with the open-ended green light thinking and plan a separate meeting to evaluate the downside or what could go wrong.

    The huge mistake is to skip this separate meeting and let your enthusiasm carry you to signing a lease, committing large amounts of capital…

  2. Separate for success. Putting all your eggs in one financial basket is crazy and irresponsible.

    It blows my mind that over 67% of all small businesses still operate as sole proprietorships. I realize the pattern that creates that outcome (comes from a tax point of view and belief about the ability to succeed), but it still blows my mind.

    Separate Safe and Risk Assets…

    You have taken the first step by forming a separate legal entity for your business. Step two is to protect your safe assets from your at-risk assets. That means stocks, crypto, gold, silver, ownership in other companies (this is a big one), artwork…assets that do not cause direct liability.

    Did You Protect Your Ownership/Investments in Other Companies? 

    Why leave any of your assets on the table that is likely to be taken in lawsuits, bankruptcy, or IRS issues? Many will say, “I only have $_____ in safe assets. I do not have enough to protect.”

    Do You Have Enough Assets to Protect?

    Actually, the less you have, the more important it is to protect it because if you lost $25K, and that represents 100% of your safe assets, that is more meaningful and impactful to you than if you were Elon Musk and got hit with a $10-million lawsuit.

    Is the Equity in Your Home Protected Properly?

    The next step in asset protection is to protect the equity in your home (if you have any in this economy). Check into your home state homestead laws to find out how much equity is protected.

    In some states, like Nevada, $550,000 is protected; and in others, it may only be $5,000 of equity. Florida is unlimited. Next, separate your real estate, both commercial and residential, from your own personal name. Typically, each commercial building (depending on the value and overall percentage of your net worth) would be held by a separate LLC.

    Your real estate risk level would depend upon the overall percentage of your net worth, which would be a big part to dictate whether a separate entity should hold each piece of real estate or if you would have 3-4 properties in each LLC.

    Your Living Trust Does NOT Protect Your Assets from Liability, But…

    Next is to tie in the living trust, as the entities’ owner, for estate planning purposes. This is a critical step to remember. Why protect your assets during your lifetime and, upon your death, leave the state to handle the distribution of your assets? Probate can be costly and take years, in some cases.

  3. Lawsuit Strategy for Survival: Ask questions, understand the challenge, back to work. What happens when you are hit with a lawsuit? The natural reaction is to be upset, frustrated, and mad!

    Most Lawsuits Emotional Derail Most Entrepreneurs, this is the Expensive Part

    Typically, you were attempting to do good, help someone out, or provide a quality product or service, and an individual or a business did not see it that way. They think that you screwed them over (right or wrong). Now, you are staring down the barrel of a lawsuit.

    Even if you feel right up front, this is totally bogus, not right, and should be set aside in court (which is, by the way, the mindset that may get your butt kicked in court).

    You May Become Financially Paralyzed 

    That lawsuit can prevent you from receiving any financing in your business name or personally, depending on who is getting sued. You never want to assume a lawsuit is bogus or will have no merit in court.

    You must approach it with 4-5 ways to attack this lawsuit, what you must do to protect yourself, and provide it invalid. You weIt would help if you organized and prepared.

    Thinking you have a slam dunk leads to being unprepared and getting your butt kicked.

What You Should Do If You Are Sued…

Here is the best approach for survival if you get sued. First, interview 2-3 different attorneys on the lawsuit and ask a lot of questions.

Ask for their initial opinion, how they would approach it, how long it should take to defend, what stages are involved, how much is their upfront retainer, what are the time requirements involved, what would have to happen for you to lose, to win, can you counter sue, and should you attempt to settle outside of court…

Get Back to Work and Focus on Your Business

Once you get your asset protection mindset around the big picture, all the steps involved, the time frame, and what your game plan will be, then you can take the most important step, focus on your business, and get back to work.

The costly part of a lawsuit can be the profits you lose from your business because you are distracted by the lawsuit. You are up at midnight, upset at the person or company suing you, and thinking, “How can they do this to me after I attempted to do business with them or help them in some way?”

Are You Weak and an Easy Target?

The worst approach can be to let them see you will make no effort to defend yourself because the lawsuit has no merit. That sends a message that you and your company are soft.

I recently spoke to the VP of a $15-billion-per-year company, and the VP told me that they must aggressively go after every lawsuit that hits their company, so they do not appear as a weak and easy target.

The approach is correct.  In the end, you have to be prepared to understand the challenge at hand, find out the time frame, issues, and expenses, put it in your budget, and get back to working on profitability. It’s like a military operation.

   Expand Your Legal Budget       

Again, as you can imagine, most do not handle it this way, and that is why even if you win and your insurance company pays the legal fees, a lawsuit can be financially devastating.

This will help you avoid many legal issues, to begin with. You may often sign an agreement or contract, and you assume the other party has reviewed the agreement.

You should NEVER sign a legal agreement or contract without having an attorney review it. I know it may take two hours to review, and it may be $500 or more for those two hours, but it can be a worthwhile investment in the long run.

Being Cheap can Comeback and Haunt You

Now, if you are opening a brokerage account with a major firm and you want to review it for the sake of understanding what you are signing, that makes sense. But if you think you will make some recommendations for changes to this major firm, that is not happening. Being cheap in this area can come back to haunt you.

Why Partnerships Fail

It does help when you start a new opportunity with another company if their side writes the agreement for you to review; that is much less than you writing the agreement. I have been on both sides. It does depend upon your position of strength in wanting to get the deal done.

If you are working with partners and do not put things in writing, that is bound to fail. This all refers to you really have a legal budget of perhaps $400-$700 per month in place, which may come into play 2-3 times per year.

If your company is much bigger, that number may be huge, especially if you have employees. HR issues can be very costly, and it is best to run it past an HR attorney vs. your buddy, who has 10 years of management experience.

All these areas are key when it comes to developing the best asset protection mindset for survival. When you develop a stronger mindset in this area, take action, and implement the recommendations. If you get hit with a big lawsuit, it will NOT derail your entire business or ruin you personally!

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Your LLC and Corporate Responsibilities as a Manager or Officer

Managers of an LLC and officers of a corporation have important responsibilities to execute properly to give them personal liability protection.

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.
Most people do not realize 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 in your role as the director, officer, shareholder or manager, member, or member of an entity.

Typically, as a director of a corporation or an LLC manager, 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.

Your LLC and Corporate Responsibilities are Vital for Compliance and Protection.

Let me cover the biggest mistakes we have seen over the years, which 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 entity’s name. Signing your name without any title or reference to your company may mean that you represent yourself personally, which 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 forming the LLC or Corporation. Perhaps you filed a DBA (doing business as) name, like Marketing Solutions, and the new LLC is Marketing Solutions, LLC.

    However, 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 with a new application listing the LLC as the applicant.
    Now the DBA name is connected to the LLC or Corporation for liability and tax purposes.

  • Binding the Corporation or LLC with more debt when you did not have the authority or permission. Make sure you read the operating agreement of the LLC or bylaws of the corporation to know the roles and responsibilities. It may require a majority vote of the entity’s owners to bind the entity with more debt.

    Don’t assume that you can do anything you want since you are the president of the corporation.

  • Commingling business funds for personal expenses. If you have an LLC taxed as an S corporation, all profits will flow through to the owners. That doesn’t mean you should take a check from the LLC bank account and write it directly for personal use items, like groceries. You can write a check from the LLC to your personal bank account first (as a distribution) then use your personal account to pay for personal items.

    That is a two-step process vs. the big mistake of taking one step and writing the check from the LLC account directly for personal items.

  • Dissolve the company and understand the ramifications of that decision. Most people want to dissolve a corporation or LLC because it has financial problems, and they want to have the problems go away. Their solution is to dissolve or “shut down” the LLC or Corporation to eliminate the “financial problems.”

    It is not that easy. In Nevada, after you dissolve a corporation, you are personally liable for any suits that arise for up to two years after the corporation is dissolved! Check out the statute at (NRS 78-585) https://www.leg.state.nv.us/NRS/NRS-078.html.

  • The other major area that will help you protect yourself personally is to understand a corporation or LLC’s roles and responsibilities.

    You may be a one-person corporation or LLC, and you may wear many “hats,” but you must be consistent with the proper “hat” you are wearing and your authority at the time. Just because you are a one-person corporation does not mean you do not have to have a meeting with “yourself.” Yes, you do.

    Again, remember, you are not the same as the LLC or Corporation. It is a SEPARATE legal entity.

  • The shareholders of a corporation are the investors who receive ownership in the corporation in return for money or assets. The shareholders elect a Board of Directors, which has overall responsibility for the business.

    In turn, the board elects the officers of the corporation, typically a Chief Operating Officer or President, Vice President, Secretary, and Chief Financial Officer, to handle the day-to-day affairs of the corporation.

  • The Board of Directors has the overall responsibility for the corporation. The directors must act in accordance with the best interests of the corporation and its shareholders.

    They have a fiduciary relationship with the corporation, which is founded on trust and confidence. The Board is required to hold annual meetings but usually meets more often than that.

The Board initially:

  • Adopts Bylaws
  • Designates the principal business office
  • Elects officers
  • Selects the fiscal year
  • Designates the corporation’s bank or banks
  • Issues initial stock to shareholders
  • Pays organizational expenses
  • Authorizes initial agreements

On an ongoing basis, the Board will:

  • Issue securities
  • Adopt a Stock Option Plan
  • Amend Articles of Incorporation or bylaws, as necessary
  • Enter into major contracts, leases, or other obligations
  • Declare distributions, dividends, or stock splits
  • Borrow significant sums of money
  • Enter into employment agreements with key employees
  • Elect officers of the company
  • Adopt or amend employee benefit plans
  • Call shareholders’ meetings.
  • Buy or sell significant assets.
  • Adopt company policies.

The officers, who are elected by the Board of Directors, handle the corporation’s day-to-day management, along with the employees of the corporation.

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Multi-Tiered Structuring Strategies for Maximum Asset Protection

One of the biggest mistakes I have found over the past 23 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!

If you own real estate outside of your principal residence, that should be held by a separate legal entity. It should not be owned by your safe asset holding LLC or by your business operating LLC. To this point your asset protection structure should look like the following diagram below.

Notice that the living trust is owning the membership interest in each LLC, which is ok because the LLC provides the “charging order” protection which is a legal remedy that only (typically) allows the creditor to receive an “economic interest” in distributions from the LLC, not a management interest in the membership interest that controls the company. Now, with the charging order and the living trust connected, you have the best of both worlds.

I find that most seem to forget that if you form an S or C corporation (except in Nevada, which is the only state that has the “charging order” protection for corporations) and you are sued personally for something unrelated to the operating company, you could lose control of your entire company AND ALL the assets of the company, including ownership to your website, bank accounts or any other assets titled to that company.

Many seem to forget even who their website is owned by, which may be their biggest assets they lose control for any online marketer.

The key part is to ask the question: What would happen if my business was sued at the operating level? Do you have any type of business liability insurance to handle the first hit?

Most small businesses owners do not have any liability insurance. This means if your business is sued, your business is on the hook for all the legal fees to defend the business.

You could lose all the assets, domain names and bank account balances in the lawsuit. The good news is your personal assets should be protected because of the separate legal entity.

The second important question becomes: What would happen if you were sued for something unrelated to the operating business at the personal level? Would you lose control of your company? Would you have a new business partner in your company? This is why so many business owners are vulnerable as a corporation where you own the stock personally.

The first strategy involves the use of Single Member LLC’s disregarded for tax purposes to accomplish two goals:

1: to isolate liability to the main operating business (the main assets) and 2: to reduce your federal tax return expenses ( a single member LLC does not have a separate federal tax return due when it is taxed as a disregarded entity vs. an LLC taxed as a partnership would have a 1065 due federally which may be $400-$800 each).

In our example,e the husband and wife have an internet marketing business and realize they do not want all their eggs in one basket with their growing business.

It is typical if you are a speaker from the platform that would be a separate legal entity, also, if you put on your own events that would be a separate legal entity, and your coaching program would be a separate legal entity.

Each business has its own level of liability and forming a separate legal entity for each to isolate liability is a smart move. You may want all the profits and losses of each business to flow to one entity for tax purposes to simplify the tax structure.

Ideally, the individual owners will have a living trust set up for estate planning purposes to complete the planning. In this strategy make sure you separate each LLC for each business on all the websites, bank accounts, credit cards… to run them as separate legal entities.

Let me share a story that shares the purpose of this diagram below. A couple of years back, I had a client from Hawaii who had a very successful flooring business doing about $3 million per year in annual revenue. He had a partner and they operated under a Hawaii LLC taxed as a partnership.

The one partner was involved in a high profile divorce and the spouse (non-partner) engaged in the charging order, again the LLC as one of the assets involved in the divorce.

Even though the charging order protected the LLC’s assets, that spouse was able to subpoena all the business records of the LLC to determine if any expenses were hidden or going to other companies that the spouse had control of. This was very disruptive to the operating entity. Although the charging order did its job, this was disruptive.

When the partner finalized the divorce and moved to Las Vegas to open a similar business with his same partner, we added a protection layer at the ownership level.

Each owner formed a separate LLC to hold only safe assets, and the safe asset it would own was the ownership interest in the operating company. NOW, if either partner had a legal issue, personal, or another divorce, instead of a charging order against the ownership interest in the operating
company, it would be a charging order against the safe asset holding LLC.

This would insulate the operating business from any legal issues with any of the owners.

This same strategy works well with an investment group, with many owners, to require each owner to have their own separate LLC to own the investment fund’s ownership. This would help avoid any disruptions to the investment fund.

In this example, the flooring company may have different divisions, each with its own product line, and a single member LLC may help with the other structure for each division for liability reasons. See the diagram below.

In conclusion, a multi-tiered approach is a very powerful, yet underutilized strategy that can often be the difference between growing your net worth and not having any at all. It is not if you will be sued, but when. The more protection will help you keep more of your assets for you and your family.

Need Strategy Help with Your Structure or Situation?
Learn more about hiring Scott Letourneau for a strategy session.

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Incorporate Your Independence from Lawsuits, Taxes and Death

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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Strategies to Preserve Your Wealth

Mark your calendar for Tuesday May 10th at 4 pm PDT/7 pm EDT. You will learn the ins and outs of advanced asset protection strategies to preserve your current and future wealth from attacks by any legal predators.
Go to this URL to register for this powerful

Even if you are currently looking to build your net worth, or if you have substantial net worth in your business, equity in your home, investments in your living trust…you must learn the most up-to-date strategies to shield your assets from liability.
As you may know there are over 80 million lawsuits in the United States every year and frivolous lawsuits are said to cost the United States over $200 Billion per year…and climbing with the current economy. Even if you are internationally based and looking to grow your U.S. asset base, this call is a must.
On Tuesday, May 10th, I’ll be interviewing one of the top asset protection and estate planning attorneys, Robert Bolick, who has received some of the highest awards in Nevada, authored numerous articles on strategies to protect and preserve your wealth!
You’ll quickly discover why Mr. Bolick is the most popular and knowledgeable legal professional around, helping entrepreneurs like yourself properly structure your business, assets and estate for maximum protection.  Mr. Bolick will share with you the basic tax and legal fundamentals of LLCs, limited partnerships and advanced tools, like the Nevada Asset Protection Trust (the best “Offshore” alternative onshore)!
Here are several compelling reasons you must be on this call and what you will learn:

  • The specific role of LLCs in asset protection and how the Nevada Statutes work to your advantage.
  • The inner workings of the “charging order” and why it is so powerful in protecting your net worth.
  • What type of assets should be held by what entity and why (a lot of costly mistakes are made in this area)?
  • When should you consider a family limited partnership?
  • When never to be a general partner.
  • Costly mistakes to avoid with family limited partnerships.
  • What is the best way to protect the equity in your residence (above your homestead protection)?
  • The inner workings of the Qualified Personal Residence Trusts (“QPRTs”) will be revealed.
  • What is the best way to obtain “offshore” protection onshore without the IRS scrutiny?
  • Plus other advanced tips and strategies to help you keep your net worth out of the hands of gold diggers!

Copy and paste the URL below in to your browser and select
your enter key to register for this powerful teleseminar
(space is limited):

Guest: Rob Bolick previously served as the president of Bolick & Boyer, prior to its merger with Durham Jones & Pinegar. Mr. Bolick maintains an “AV” rating with Martindale/Hubbell, which is the highest rating awarded to attorneys for professional competence and ethics.  He graduated from Brigham Young University, J. Reuben Clark Law School – J.D., cum laude (1981), with his B.A. from Brigham Young University (1978). He is admitted to practice law in Nevada, Utah, Arizona, California, Hawaii, All State and Federal Courts in Utah and Nevada, United States District Court, District of Nevada and United States Tax Court.  He has been named the Outstanding Estate Planning Attorney of the Year, Nevada Business Journal,  The Charitable Facilitator of the Year, Nevada Community Foundation, listed in Nevada Super Lawyers (top 5% in field), Chair, Planned Giving Committee for Vegas PBS, Local Public Broadcasting Station Affiliate, Member, Board of Directors, Southern Nevada Public Television, Past President, Southern Nevada Chapter, International Association for Financial Planners and Appeared on several 1/2 hour shows on Advanced Estate Planning and Asset Protection, Vegas PBS. His many publications include Trusts 101, Helping Your Clients Select the Best Entity Option, Essential Asset Protection Techniques and Strategies, Co-author, Sophisticated Estate Planning Strategies for the Advanced Practitioner in Nevada, NBI in Conjunction with CLE Courses for Nevada Attorneys, Co-author, Effective Planning for the Small Estate in Nevada, NBI in Conjunction with CLE Courses for Nevada Attorneys, Co-author, Basic Probate Procedures and Practice in Nevada, NBI in Conjunction with CLE Courses for Nevada Attorneys and many others.
Host: Scott Letourneau, CEO of Nevada Corporate Planners, Inc. You will learn from Scott’s diverse expertise and his comprehensive and ever-growing list of powerful business resources.  These are the very elements that have allowed his 5,500+ clients, both domestic and abroad, to incorporate their business with confidence, “propelling their business on a fast track to profits!”
Scott has a BA in Finance and is the author of “The Insiders Guide to Incorporating Your Business and Protecting Your Assets!” He is also a contributing author for the new book from Entrepreneur Magazine’s Startup series; Start Your Own Information Marketing Business – Your Step-by-Step Guide to Success.”
Register Today for this Powerful Teleseminar on May 10th at 4 pm PDT/7 pm EDT to learn Advanced Asset Protection Strategies to Preserve Your Wealth!
Dedicated to Your Success,
Scott Letourneau
E-mail: ncp@nvinc.com
Nevada Corporate Planners, Inc.
Fast Start to Profits™!
7477 W. Lake Mead Blvd. Ste. 170
Las Vegas, NV 89128
(888)627-7007 begin_of_the_skype_highlighting (888)627-7007 end_of_the_skype_highlighting begin_of_the_skype_highlighting (702)367-7373 begin_of_the_skype_highlighting (702)367-7373 end_of_the_skype_highlighting begin_of_the_skype_highlighting
Fax: 702-220-6444
Visit our Blogs at:
www.FastBusinessCreditSecrets.com www.ScottLetourneau.com Please Join My Linkedin Network:
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17 Million Sole Proprietorships are Considering Incorporating in January…And You can Get Paid

Why this is a Great Opportunity Now:
Keep in mind that JANUARY is the MOST POPULAR MONTH for entity filings throughout all 50 states.
This is the time of the year; people will evaluate their business structure and make the switch from a sole proprietorship to a separate legal entity.
They may be searching online for solutions and pricing. Most are guessing at what type of entity may be best and many times do not have the correct operating agreement or filings with the IRS (which all cause problems down the road).
The Easy Process to Refer to NCP:
You can simplify the process for them and refer them directly to NCP. The simple way is to just have them call NCP at 1-888-627-7007 and have them speak to our staff.
When you advise a business associate to call our company to inquire on how we may help them, just say:
“I came across a great company that has been helping business owners get off to a fast start for the last 13 Years. They help you with everything — from incorporating your business, to building business credit, to keeping the IRS off your back. Plus they have great tools to help grow your business. Check out their powerful new FREE CD, Get Your Business Off to a Fast Start to Profits™, which will cover costly mistakes made when form an LLC or corporation and other value tips to protect your assets.  Just go to their website, www.nvinc.com and call them at 1-888-627-7007. Let them know you were referred by me and they will take great care of you!”
When they call we will ask who they were referred by and you will be credited with the sale (and we do all the work).
Many of your friends and businesses associates may be searching right now to incorporate or form an LLC and now you can help them out and be paid for it (as you should be) for directing them to NCP.
You can use your current website, blogs or facebook page to earn cash every
month (or the old fashion way, of talking to people and referring them to NCP -we track every new lead).
Go to www.nvinc.com/GetYourMonthlyCheck and you can go to http://www.nvinc.com/affiliates.htm and register as an affiliate for additional tools. It is NOT necessary to register as an affiliate to get paid. It offers additional tools to help you make more money!
In fact, we would like to send a referral check to you every month making this added “windfall” income a profit center to your business!
Imagine receiving checks for $250, $500 or $1,000 per month! With no cost of goods sold, that’s pure profit (would that help pay for the holidays).
About the author:
Scott Letourneau is the founder and CEO of Nevada Corporate Planners, Inc. Over the past 13 years NCP has assisted more than 5,500 business owners form LLCs and corporations to get their business off to a fast start to profits™! Questions? Call NCP at 1-888-627-7007. www.nvinc.com

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