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Posts categoriezed as Asset Protection

TRANSFER ON DEATH DESIGNATION FOR YOUR BUSINESS

TRANSFER ON DEATH DESIGNATION FOR YOUR BUSINESS published on

A Transfer on Death (TOD) designation for a business is a must if you have more than one member or shareholder. The Transfer on Death is a mechanism that allows the seamless transfer of ownership or control of a business interest to a designated individual upon the death of the current owner. This is a way to plan for the succession of a business without the need for probate.



For example, if a spouse untimely passes away, the Transfer on Death can designate the surviving spouse to receive all of the decease ownership in the business.

The specifics of a Transfer on Death for a business can vary depending on the jurisdiction and the type of business entity. Here are a few common scenarios:

Transfer on Death for Business Interests:

For sole proprietorships or partnerships, the business owner can designate a specific individual or individuals as beneficiaries who will receive the business interest upon the owner’s death.

Transfer on Death for Corporate Stock:

In the case of a corporation, an individual can specify beneficiaries for their shares of stock through a Transfer on Death designation. This allows the designated individuals to inherit the stock outside of probate.

For an LLC, the owner can often designate beneficiaries for their membership interests using a similar TOD designation. It’s crucial to work with legal and financial professionals when setting up a Transfer on Death for a business, as the structure and requirements can vary based on the business type and local laws. Additionally, businesses often have complex ownership structures and contractual agreements that need careful consideration in the estate planning process.

In some cases, a comprehensive business succession plan may involve a combination of tools, such as a Buy-Sell Agreement, a will, or even the establishment of a business trust. These decisions depend on the unique characteristics of the business and the goals of the business owner.

Please submit your contact details below to discuss the Transfer on Death designation for your Corporation or LLC.

 

CONVERTING A SOLE PROPRIETORSHIP TO AN LLC OR CORPORATION

CONVERTING A SOLE PROPRIETORSHIP TO AN LLC OR CORPORATION published on

Some entrepreneurs opt for an easier business model like a sole proprietorship due to its simplicity. However, as a business finds itself growing, they may find it beneficial to go from a sole proprietorship to an LLC or Corporation.

Deciding which business structure to choose plays a significant role when using the entity for anonymity, asset protection, and tax savings.

LIMITED LIABILITY PROTECTION

One reason a business would choose to convert to an LLC or Corporation would be due to the liability protection they offer. Both LLC and Corporations offer a cloak of protection that separate one’s personal assets with the businesses. In essence, if the business under goes financial or legal troubles, personal assets can’t be targeted. Serving as a sort of veil of protection for the business owners’ personal assets. This sort of protection is critical for a business owners own security.

FINANCIAL STRUCTURE

Now, both LLCs and Corporations offer a better financial structure for your business because of the flexibility they offer over a Sole Proprietorship. Corporations have the option to choose between C-Type or S-Type Corporations depending on the circumstances. While LLCs have a pass-through option for the business, allowing the taxes to flow through to the owners’ personal taxes, simplifying the tax process.

PERPETUAL EXISCTENCE

LLC’s and Corporations also have legal requirements and formalities that need to be upheld on an annual basis, like meetings and maintaining proper reports. Even though this might come off as cumbersome to some, this proves to give clarity on the path to success. Unlike sole proprietorships or partnerships which are bound to the life of the owner, Corporations and LLC’s can be passed on to the next generation of owners perpetually. Allowing for clearer business structures, and the ability to draft legal documents. This allows businesses to plan for a solid and financially successful future.

Converting to either an LLC or Corporation should be considered a strategic move for sole proprietorships. This could bring many benefits to your business by bringing tax benefits, liability protection and an opportunity for growth. However, the decision to convert should be made with careful consideration to the specifics of each other’s situation.

Spiegel & Utrera, P.A. offers free legal advice to help you start the process of converting your sole proprietorship into an LLC or Corporation. Submit a request today for immediate legal assistance.

Please submit your contact details below for a FREE consultation on CONVERTING your sole proprietorship to a Corporation or LLC.

 

GIG ECONOMY LLC

GIG ECONOMY LLC published on

The gig economy is also known as the sharing, on-demand, or access economy. It usually includes businesses that operate a digital platform to connect people to provide services to customers.

While there are many types of gig economy businesses, ride-sharing and home rentals are two of the most popular. Users of the digital platform (e.g., Uber, Lyft, Door Dash, VRBO) earn income providing on-demand work, services or goods.

Workers operating as drivers or other on demand work in the gig economy are classified as independent contractors rather than employees. It is recommended that Uber, Lyft, or other on demand workers form a Gig Economy LLC and use this tool to lower your tax bill and to protect your assets.

Benefits of Spiegel & Utrera, P.A.’s Gig Economy LLC

Lower your Tax Bill with a Gig Economy LLC

By reporting Uber, Lyft, Door Dash, VRBO, etc. earnings under the umbrella of a business structure you may be able to lower your tax bill. An accountant or tax preparer will be able to assist you with deductions related to paying for health insurance, setting up a retirement account, claiming the qualified business income deduction, car expenses, depreciation expenses, home office deductions, financing costs for your business.

Avoid Personal liability with a Gig Economy LLC

Working in the gig economy can mean freedom and a better income, but it also means personal liability if there’s an accident or misunderstanding between you, the client, or the digital platform.

You will want to protect yourself and family assets by forming a Gig Economy LLC. LLCs generally don’t require a ton of maintenance, the LLC protects your assets, and offer potential tax savings.

Operating your business as a sole proprietorship (yourself) or as a DBA is not recommend because your personal assets — like your house, car, personal bank accounts, etc. — would be at risk if you are sued.

What are the benefits of forming a Gig Economy LLC

Limited Liability Protection

Starting with the most crucial benefit of a GIG ECONOMY LLC, limited liability can separate the financial and legal obligations of the company from its members. In case of a lawsuit, you can be protected due to a legal shield the entity provides, which defends personal assets. Keep in mind that this liability protection is limited and will not shield a member from wrongful or illicit acts.

Pass-Through Taxes

Another vital benefit of a GIG ECONOMY LLC is its ability to avoid federal income taxes. Taxation will bypass the LLC and go directly for the members’ profits. In this scenario, all of the money earned by the LLC can go straight to the member, and taxation will only occur on their income. Other entities such as a C-Corporation don’t have this advantage, and its leaders are essentially taxed twice.

Simplicity and Flexibility

Other GIG ECONOMY LLC benefits include its ease in formation and simplicity to sustain when compared to other entities. You don’t need to maintain certain company formalities or file taxes for the single-member LLC. You also have the flexibility of functioning as a single-member LLC, a multi-member LLC, or a multi-member LLC led by an operating manager.

Increased Perception of Credibility and Reliability

As a formal business entity, a limited liability company receives the perception of a more trustworthy business structure when compared to an individual or a sole proprietorship. Starting a GIG ECONOMY LLC adds an extra layer of reliability for employees, customers, and other businesses. Your LLC is required to adopt ‘LLC’, ‘L.L.C.’ or ‘limited liability company’ into its name, which immediately lets people know that you are a formal business and not just a fly-by-night company.

Who participates in the Gig economy?

Gig economy workers accounted for 14.1 percent to 20.5 percent of all workers in the United States. Gig economy workers on average are older than the entire workforce and the average age of gig workers has increased more rapidly. In addition, gig economy workers are more likely to be married than all workers, but the spouses of gig economy workers are less likely to have full-time jobs.

ARTICLES OF INCORPORATION 2.0 UPGRADE

ARTICLES OF INCORPORATION 2.0 UPGRADE published on

Over the years, just like updates, improvements, and filings for your business are required, an upgrade of your Articles of Incorporation or Certificate of Organization may be required as well. If you used our firm to form your company, you may already have comprehensive incorporation or articles of organization documents. However, as time goes on and changes occur in your business, a second revision or upgrade to the articles or certificate of organization may be required. Go here to request your Articles of Incorporation 2.0 Upgrade.

Articles of incorporation or certificate of organization serve as the foundational documents for your entity. They outline the name of the corporation, structure of your entity, effective date of formation, purpose, registered agent, principal office, duration, authorized shares, board of directors information, incorporator information and other clauses to protect you and your business.

SHOULD YOU UPGRADE YOUR ARTICLES OF INCORPORATION OR CERTIFICATE OF ORGANIZATION?

Upon review of your Articles of Incorporation or Certificate of Organization, it may be that your document is missing restrictions on the transfer of shares, missing indemnification clauses, and missing special voting rights provisions. Amending your documents to include the ladder mentioned, is a significant upgrade to protect your business, members and directors.

Additionally, the entity will want to have it’s company documents upgraded prior to there being a need for another party or investor to review these documents. It’s important to note that while (in some states) articles of incorporation are a publicly accessible document, certain details and information about the corporation can also be found in other documents, such as annual reports, bylaws, and filings with regulatory agencies. When sharing your articles of incorporation, it’s a good practice to provide complete and accurate company documents to ensure accurate representation of your corporation’s structure and purpose. It’s good practice to keep all your company documents in one place and keep them handy and organized in your company book and binder.

Here are just a few items that may trigger an upgrade to your Articles of Incorporation:

  1. Change in Company Name: If your business decides to change its legal name, you will typically need to upgrade the Articles of Incorporation to reflect this change.
  2. Change in Business Purpose: If there is a significant change in the primary purpose or activities of your business, you may need to upgrade the Articles of Incorporation to reflect the new business purpose.
  3. Change in Share Structure: Any changes to the authorized shares, classes of shares, or the rights and privileges associated with those shares may require an upgrade with an amendment to the Articles of Incorporation.
  4. Change in Directors or Officers: If there is a change in the board of directors or officers of your business, you may need to upgrade the Articles of Incorporation to reflect the new individuals in these positions.
  5. Amendments to Governing Documents: If you wish to make other amendments to the governing documents of your corporation, such as changing the bylaws, you may need to upgrade the Articles of Incorporation to reflect these changes.
  6. Conversion or Merger: If your business undergoes a merger, consolidation, or conversion into a different type of entity, you may need to upgrade the Articles of Incorporation to reflect these structural changes.

GO HERE TO REQUEST YOUR ARTICLES OF INCORPORATION 2.0 UPGRADE

WHO MAY NEED TO REVIEW YOUR ARTICLES OR CERTIFICATE OF ORGANIZATION

  1. Government Authorities: State and local government agencies, such as the Secretary of State’s office or the relevant state’s corporate regulatory body, will have access to your Articles of Incorporation. These agencies use this document to officially recognize and register your corporation.
  2. Internal Use: Members of the corporation, such as shareholders, directors, and officers, often need to access the Articles of Incorporation to understand the organization’s legal structure, purpose, and governance provisions.
  3. Lenders and Financial Institutions: When seeking loans or financing, banks and lenders may request a copy of your Articles of Incorporation to verify your business’s legal existence and structure.
  4. Investors: Potential investors and venture capitalists may request or review the Articles of Incorporation to understand the company’s structure, share classes, and any special rights associated with shares.
  5. Business Partners: When entering into contracts or agreements with other businesses, your partners or vendors may request a copy of the Articles of Incorporation to ensure that they are dealing with a legitimate legal entity.
  6. Legal Counsel: Your corporate attorney or legal advisors may need access to the Articles of Incorporation when providing legal advice or making amendments to the document.
  7. Regulatory Agencies: Depending on your industry, specific regulatory agencies or bodies overseeing your business may require access to your Articles of Incorporation to ensure compliance with industry-specific regulations.
  8. Shareholders or Members: Shareholders and members may request copies of the Articles of Incorporation when participating in corporate governance decisions or to understand the company’s governing rules and structure.
  9. Courts and Litigation: In the event of legal disputes or litigation, courts may require access to the Articles of Incorporation to understand the corporation’s legal structure and relevant details.
  10. Prospective Buyers: If you are considering selling your business, potential buyers may request or review your Articles of Incorporation to understand the company’s legal and financial standing.

GO HERE TO REQUEST YOUR ARTICLES OF INCORPORATION 2.0 UPGRADE

ASSET PROTECTION FOR YOUR PARTICULAR CIRCUMSTANCE IN 2023

ASSET PROTECTION FOR YOUR PARTICULAR CIRCUMSTANCE IN 2023 published on
Spiegel & Utrera, P.A. has helped hundreds of thousands of clients with setting up entities such as Corporations, LLCs, Trusts, and Partnerships over the years. One of the driving forces behind setting up an entity such as a Corporation, LLC, Partnership, or Trust is the idea that you can separate your own personal self from whatever it is you are trying to protect by putting those items into that entity.
Asset Protection
Many people set up entities to protect their assets, and the key to asset protection is asking the right questions! What is it that you are trying to accomplish? Is it a business you’re trying to protect? Is it real estate you’re trying to protect? Is the real estate income producing? Is the business operational? Is it just cash that you are trying to protect? The key to forming an asset protection strategy is to gather what it is you want to accomplish and find out your particular set of circumstances and facts.

Another key to asset protection is anonymity and layering the entity to protect your public records. For example, you may need to create an entity in a state that protects your public records and then use that entity for anonymity in a separate state. Remember, we don’t want anybody to know our strategy as we’re trying to protect our assets.

SUBMIT AN ASSET PROTECTION INQUIRY HERE

If you are a current member of our General Counsel Club, please call our General Counsel Club line at (800) 734-9900 to discuss your asset protection strategy directly with Larry Spiegel.

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