COVID Funding Tips for Small Businesses
Are you protecting one of your most valuable assets? Did you realize that if you own domain names, you own virtual real estate free and clear? Yes, when you paid $8 or so to reserve you domain name, you or your company own it free and clear!
Who should own your domain names? What is most common? Usually most entrepreneurs own their domain names either through their own name personally or their operating company. Both of those are probably a mistake, especially if your “virtual real estate” has value!
If you owned a free and clear piece of real estate, like a rental property that was worth $500,000, would you own it personally or in your operating business? Never! If you owned it personally you are exposing a very valuable asset for lawsuits! If you had it owned by the business you are unnecessarily exposing your valuable asset to lawsuits that could occur against your business. Regular real estate is a risk asset by itself. But “virtual real estate” like a domain name does not necessarily bring much risk to it. The exception is; if you reserve a domain name and later discover that you may be violating someone’s intellectual property or a claim is made against you.
If your domain names is responsible for 60-90% of your leads to your operating business it may be a very valuable asset. For example, NCP’s website, www.nvinc.com, which we have owned since 1997, is a very valuable asset. It generates about 60% of our leads and is owned by a separate operating company and leased back to Nevada Corporate Planners, Inc.
Many of you may want to consider forming a safe asset holding LLC to own all your domain names and lease them back to your operating company. Typically it would be an LLC taxed as a partnership.
If you are just starting your business and there is no value to your “virtual real estate” other than the price you paid for your domain name, then leaving it your name or the business name may be ok short term. My preference would be to be owned by your operating company as a first step. If that is not the case, you can transfer the ownership to your operating company.
In summary, make sure you properly protect your domain names, especially as they gain value. A separate legal entity may make sense for many of you. For specific questions on your situation, call NCP at 1-888-627-7007!