Uncategorized

Huber II Shows Where Proper Drafting Can Prevent Omissions in Operating Agreement From Allowing Upstream Control to Change Downstream Partner Interests

Asset transfer set-asides under the Uniform Fraudulent Transfers Act can create significant collateral consequences, especially when accomplished in the bankruptcy arena and the trustee becomes the new majority owner of an entity who is the major stake-holder in the down-stream entity. This Huber line of cases in Washington has done enormous damage to the case-law on domestic asset protection trusts and their usefulness when strategically mis-used, as Huber did when he formed a DAPT and then filed bankruptcy soon thereafter. That’s what happens when a do-it-yourselfer takes matters into his own hands.

Asset transfer set-asides under the Uniform Fraudulent Transfers Act can create significant collateral consequences, especially when accomplished in the bankruptcy arena and the trustee becomes the new majority owner of an entity who is the major stake-holder in the down-stream entity. This Huber line of cases in Washington has done enormous damage to the case-law on domestic asset protection trusts and their usefulness when strategically mis-used, as Huber did when he formed a DAPT and then filed bankruptcy soon thereafter. That’s what happens when a do-it-yourselfer takes matters into his own hands.

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Uncategorized

7 Myths About Choosing a Business Entity

New business owners must weigh the pros and cons of the choices they make when it comes to choosing the right business entity for a new enterprise; Entrepreneur recently posted 7 myths that could get in the way of selecting the best business entity:

An LLC saves taxes.  The Limited Liability Company (LLC) is designed to provide asset protection, not provide tax write-offs.  This structure is best for holding assets or for governing partnerships between owners or other corporations.

A C-Corp helps small business owners save taxes.  C-Corporations are for very large entities that require the unique structure this entity provides for tax deductions, many of which don’t fit a small business owner.  An S-Corporation may be a better choice, and helps small business owners avoid a double taxation issue.

Corporations provide better asset protection than LLCs.  It is not the entity itself that provides asset protection, it is the procedures that must be followed – i.e., following strict corporate guidelines, avoiding the comingling of funds, maintaining good corporate records – that creates the protective “corporate veil”.

Setting up a Nevada or Wyoming Corporation will help save taxes and protect assets.  Your company will be taxed on its profits by any state where you do business.  And if your home state requires you to register your company there, your state’s laws will govern asset protection.

S-Corporations face a larger risk of being audited by the IRS.  Small business owners using an S-Corp do not have to pay self-employment taxes, but that doesn’t mean the IRS is any more focused on S-Corp owners.  As long as you pay careful attention to your payroll allocation each year to ensure it’s reasonable, your company is not at a greater risk for an audit.

Sole Proprietorships are a bad idea.  Actually, this could be the ideal structure if you’re just starting out.  Once your business becomes viable and starts to grow, you can look at other entities.  If you have partners or investors, however, a sole proprietorship is not the best entity for you.

Using an online service to set up my business will save time and money.  It’s tempting to think you can set up your business online for a few dollars, but choosing the right entity can save you thousands in taxes and administrative costs, so should be chosen carefully with input from a Creative Business Lawyer™.  Don’t be penny wise and pound foolish when choosing a business entity for your new venture.

If you’re a small or mid-size business owner, call us today to schedule your comprehensive LIFT™ (legal, insurance, financial and tax) Foundation Audit.  Normally, this session is $1,250, but if you mention this article and we still have room on our calendar this month, we will waive that fee.

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Financing Your Business

Puddle: A New Way to Create An Online “Micro-Community Bank” Funded by Your “Friends”

What is a Puddle?

A puddle is a line of credit you can create quickly with your trusted friends. Pool money together towards a common goal and anyone can borrow the cash as needed.   You can start a new puddle or join an existing one. You set all the rules. We hope this model proves to be a popular and addictive way to share money and build trust amongst friends.

How Does A Puddle Work?

State Your Need

First, decide how much money you need and when. This kicks off your puddle with a clear goal for pooling your cash.

Invite Your Friends

Choose people you know and trust to help you reach your funding goal. You’ll trust them more after this.

Borrow What You Need

When your goal is met you can borrow the money and transfer it directly to your bank account.

Repay Monthly

Each month you’ll pay back part of the money you borrowed, plus a little interest that goes directly to your friends.

Repeat!

As money is paid back, money is available for anyone in the group whenever they need it!

Here’s a link to a great Forbe’s article introducing “Puddle:”  http://onforb.es/13AJzNu

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