Asset Protection
Ask yourself this question, "What single thing could cause me to lose everything that I have worked my entire life for?" Only one thing can cause this and that is the grossly litigious society in which we currently live. The prospect of contingency fees on large judgments has attorneys everywhere searching out reasons to sue people just like you and me.
It is commonplace for people just like you to say "I am not going to get sued; I don't do anything to hurt anyone." Ask yourself the following questions:
- Do you drive a car?
- Do you own a home?
- Do you own a business?
- Do you have children?
- Do you have rental property?
- Do you have repairmen and other invitees on your property?
- Do you have animals?
- Do you participate in sports?
- Do you borrow money?
- Do you use credit cards?
If you answered yes to any of these questions, then you stand to be sued. While almost depressing, it is a fact that on average each of us will be involved in four lawsuits during our lifetime. Further, that more than 98% of those lawsuits will be settled out of court in order to avoid the time, money, frustration and uncertainty that bringing a lawsuit to trial creates.
How Do You Stop this Atrocity?
Make it nearly impossible for creditors to reach your assets. By moving your assets into limited liability entities such as the Limited Partnership or Limited Liability Company you effectively move those assets beyond the reach of creditors. In fact you create a situation whereby, through what's known as a charging order, your creditor may end up paying your taxes.
Maybe even more important is that by doing exactly the same thing, moving your assets into a limited liability entity, you are making yourself appear worthless. You might ask yourself why you would want to appear worthless, but the answer is simple. When someone goes to a plaintiff's attorney in hopes of suing you, that attorney goes through a two-step process. The first step is to ascertain the merit of the case and the likelihood of obtaining a judgment. The second step is to determine whether that judgment can actually be collected or not. If you appear worthless no attorney worth their weight is going to be willing to take the case on. What better form of asset protection could you ask for, not being sued at all!
Tax Reduction
It is no secret in this country that some business entities enjoy significantly different and potentially more beneficial systems of taxation. Depending on your business activity, the type of entity operating the business will can have a dramatic impact on the amount of tax paid. Choosing the business entity that is right for you is crucial.
You have probably heard repeatedly that you could save a bundle in taxes by moving your money offshore. You have probably heard that by doing so you will never have to pay taxes again. Wrong! What you have heard are promotions that are illegal and will land you in jail. You are required under federal law to completely disclose all of your offshore holdings and income and pay taxes on them here in the U.S. Operating a valid domestic business in the United States can reap significant rewards, so there is no reason for 99.9% of companies to go offshore. Instead, in makes sense to look at the differences in business entities in the various domestic jurisdictions and see if any of the differences will benefit you.
You may have heard that many businesses choose Nevada because of its business friendly laws and absence of a state corporate income tax. You may also have heard that Nevada promotes personal privacy and that many of its entities are protected by charging order statutes. If you are interested in these types of benefits, then it may make sense to form a business in Nevada. Call us today to learn how strategic entity planning will work for you.
The law allows you to pay the minimum amount of tax — it does not allow you to evade taxes. Even if the State in which you establish a business does not access an income tax on the business, this will not impact your responsibility to file and/or pay Federal Taxes.