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Business Entities

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  • Business Entities

    Curious how you guys have your business entities setup best your personal protection as well as tax’s. Had a friend explain just an LLC wasn’t the best route

  • #2
    Limited Partnership.
    "The comeback is always stronger than the setback."
    Mom, Navy Vet, genealogist and voracious reader
    Always sunny in California


    • #3
      Which is the priority, taxes or liability? Each vary slightly by state so if it's liability ask a lawyer if it's taxes ask an accountant.


      • #4
        LLC (Single person)
        Good insurance + personal umbrella
        Don't ever overlook possible dangers at your facility that could lead to you being sued. If you see a hazard, fix it.
        Good luck!


        • #5
          There are plenty of legal tricks if you want to hide ownership and provide some legal protection. However, if you are the operator and making any decisions in the business, you are still going to be in a lawsuit if it comes to that, whether a blind trust, LP, LLC, or corp. Have plenty of GL insurance and a personal umbrella.

          LLC is the most straightforward and easy to originate and operate plus it provides some legal protection, mostly from creditors. LP is similar but with more limited legal protection. If you want to really hide things you can do a land trust registered with an out of state lawyer and yourself or some other company you own as beneficiary. I hate all the land trust and hiding assets as a pain in accounting and too many lawyer fees to operate, but plenty of people do it to separate and hide their assets in case of a big lawsuit.


          • #6
            What did your friend say was the best route?

            If you're doing a business, you will run into many people that will tell you what you're doing wrong or why you will fail. Don't listen to them or spend time with them, unless they give you options or "questions" to research.

            You have two questions:
            A. Taxes- C Corp, you have to pay Corporate taxes and then Personal on the same income. C Corp since they have been around longer have far more tax advantages. Have your Tax accountant file as a C corp even though you are another type of entity. Subchapter S- you can keep the money in the company and pay taxes their, but then you have to pay personal taxes later. If you get to much "Non-operating Income" and assets in the Subchapter S, versus Operating you can get penalized. LLC- no income taxes, passes straight thru to you. Partnerships, and others. This is a simplistic view. Talk with your accountant.

            B. Liability- Both company and personal- As stated above, 1. Insurance, 2. as noted above, set your company who owns the assets up in a business friendly state such as Wyoming or Nevada for LLC's., 3. LLC- make a comment that you are authorized to not distribute earnings in your operating agreement., 4. Don't give Personal Guarantees on company loans. Most banks will require that though.

            C. Are you worried about if you die or become mentally incapacitated? Then you need to work with a Trust lawyer, not your regular lawyer. LLC or any entity type won't be good enough.

            If your at this point you need to start researching and reading. Going to seminars. Joining specific forums.


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