Asset Protection/Personal Liability
Shield — Choosing the Entity Form
One of the primary concerns of most individuals
contemplating starting a business is that of shielding the owners
of the business from the debts and liabilities of the business.
Sole Proprietorships and General Partnerships:
While Sole Proprietorships and General Partnerships
are very simple and economical ways to begin engaging in business
with some tax and other advantages, these types of business entities
have the enormous drawback of providing no “front end” protection
or shield to its owners from liability for the company’s
debts and other liabilities. Therefore, doing business as a either
a Sole Proprietorship or a General Partnership is almost always
a bad idea.
Limited Partnerships:
Properly structured Limited Partnerships or
Family Limited Partnerships can provide both “front end” and “back
end” protection. A Limited Partnership is composed of a
General Partner and Limited Partners. While the Limited Partners
are shielded from the debts and liabilities of the Limited Partnership,
the General Partner is fully exposed to the debts and liabilities
of the partnership. Also, in a Limited Partnership, it is important
realize that the Limited Partners are not allowed to participate
in the management and operation of the business. Therefore, structuring
of the Limited Partnership is critical, in order to ensure minimal
exposure from the General Partner side and to ensure that the
Limited Partners maintain their shield from the debts and liabilities
of the business.
Corporations:
Properly formed and maintained Corporations
can provide maximum “front end” protection or shielding
of the owners/shareholders from the debts and liabilities of
the corporation. As compared to Limited Liability Companies (LLC’s)
and other business entities, Corporations generally have the
drawback of having to comply with specific statutory “formality” requirements,
such as organizational meetings, annual meetings, requiring designation
of officers and directors. The failure to comply with the requisite
business formalities may create some risk of the Corporation
having its veil pierced and personal liability being attached
to the shareholders/owners of the Corporation. Another drawback
on the “back end”, as compared to partnerships and
LLC’s, is that the shareholder’s stock may be attached
by a shareholder’s personal creditors to satisfy a judgment.
At R. D. Johnson & Associates, we understand
and are sensitive to your need for optimum asset
protection and shielding from personal liability.
Therefore, we offer a free initial half hour consultation,
wherein we will discuss your business entity options
and how we can best help to ensure that you and
your business associates receive and maintain sufficient
asset protection and are shielded from personal
liability.
During your free consultation, R. D. Johnson & Associates
will be happy to explore the entity options with you and help
you to ascertain which entity would best suit you and your
new business.
Why
Form a Business in Nevada?
Nevada (often called the “new Deleware”)
currently has what is considered to be the most favorable business
entity laws in the United States which provide real advantages
to businesses of all types. Some of the advantages over many
other states of forming a Corporation or Limited Liability Company
(LLC) in Nevada include:
• No State Corporate Income Tax
• No State Taxes on Corporate Shares
• No State Franchise Tax
• No Personal Income Tax
• No Internal Revenue Service (I.R.S.) Information Sharing Agreement
• Relatively low Annual Fees
• Minimal Reporting and Disclosure Requirements
• Stockholders are not Public Record (i.e., bearer shares are allowed in
Nevada) (maintaining maximum Stockholder anonymity & privacy)
• Only one person is needed to create and maintain a legal Corporation
or LLC
• Stockholders, directors and officers need not live or hold meetings in
Nevada, or even be U.S. citizens
• Directors need not be stockholders
• Officers and directors of a Nevada corporation or LLC can be protected
from personal liability for lawful acts of the corporation or LLC
• Nevada corporations may purchase, hold, sell or transfer shares of its
own stock
• Nevada corporations may issue stock for capital, services, personal property,
or real estate, including leases and options. The directors may determine the
value of any of these transactions, and their decision is final.
Why
Choose an Attorney to Incorporate My Business?
While there are currently many non-attorney
incorporation services now available which tout their low incorporation
fees, there a number of very real reasons why you should choose
a licensed Attorney to form your new business, including:
• Non-Attorney individuals and companies
cannot lawfully provide you with legal advice concerning the
formation and maintenance of your company.
• Many of these individuals and companies fees are so low because they
do not provide all of the services needed to complete the incorporation and formation
filing and process for full compliance with the applicable Nevada statutes. This
may lead to your paying even more fees in the long run.
• Some of these companies and individuals, while advertising that they
are “incorporating” a company for you, actually only form an entity
with themselves shown as legal owner and then “sell” the consumer
a corporate or LLC “shell”. Some unwitting consumers are then left
on their own, not knowing that additional filings and procedures are required
until they discover that their entity charter has been revoked or that they may
be subjected to personal liability and are then hit with additional fees and
costs to bring the entity into compliance (if the deficiencies are discovered
soon enough).
• Many of these entities only provide you with non-customized Forms that
may or may not fit your company’s specific needs.
• An Attorney, on the other hand, can assess your specific needs and provide
you with valuable legal advice and a customized entity formation that may save
you hundreds or thousands of dollars in the long run.
• An Attorney can provide you with ongoing legal advice and assistance
to help ensure that your company continues to provide you and your associates
with the personal liability shield that is critical to ensure that the individuals
are not saddled with costly personal judgments and other problems.
• An Attorney can provide your business with ongoing legal advice and assistance
to help you make important decisions that may greatly impact your company.
To form a Nevada entity either give us a call
or email for an appointment for a free consultation. Or, to start
the process to form a Nevada Corporation or LLC now, click on
the following link to complete the online formation questionnaire.
Form
a Nevada LLC Online
Form
a Nevada Corporation Online |
