Looking for advice (I know to consult my own attorney, but just doing some researching)…
I’m a single mom and divorced, living in WI. I’m looking to go into business with an associate who is in the middle of a divorce with children, living in IL. We, obviously, want to protect our assets and future business dealings. We are interested in wholesaling and tax lein properties. Any advice you have in setting up our business to provide the greatest asset protection is appreciated.
Thanks!
For establishing or setting up your business, you have to make a strategy with a basic information all about setting up your business.
Another way you can also get in contact with a person who is familiar of all the tactics and can easily be setup your bizz.
All the best!!
Setting up a business starts with YOU making a Business Plan.
There are a number of steps and questions to ask.
- What is the nature of the business
- why do you want to set up a business?
- Do you want to make money?
- Do you want to lose a lot in tax or a little?
- Do you want to protect your personal assets against potential loss from litigants?
- Do you want to take the advice on legal matters from a person who is not a lawyer?
- Do you want to take financial advice from a person who is not financially qualified?
Do not listen to your accountant when they tell you not to worry about setting up a company until your earnings reaches a tax threshold - You need a corporate structure DAY ONE for Asset Protection
Best to have both an LLC and an INC. Do not bother asking your lawyer how to use these for tax management - most do not have a clue!
Now - Better start learning a lot about financial management, business law, and real estate and the special area you like
… Find yourself some good advisers who know a lot about each area
and make sure you have sufficient capital to meet budgeted expenses for at least 6 months
You do have a budget don’t you? That is part of the Business Plan you Must start with!
As you are looking at a business partner you need to sort out what the arrangement is to be
Best it is done via an INC. not a partnership and not an LLC - although you will need LLCs for running the business, but the INC should be the owner of the business LLCs
You need a dispute resolution system - for when you and your business partner disagree, and a succession plan, buyout plan, and mutual cross insurances
If you are going to make a lot of money then best you have the business properly structured by someone like myself :rolleyes
Get a lawyer.
The last thing you want is to be in a situation where your partner (who is not yet divorced) has to give half of her property to her ex-husband and now the two of you are in business with him.
Have a contract, partnership agreement, LLC operating agreement or whatever PUT IT IN WRITING. And SIGN IT.
Determine in advance who does what, who gets what. Who makes any personal guarantees on loans, and gets what in return. Who puts in more capital when the business needs cash. If the capital contributions are not equal, does the future income distribution change. Death, marriage, divorce, right of first refusal to buy when something happens. Decide everything in advance, reduce it to writing and sign it. Even if it’s the back of a napkin at McDonalds.
In your case avoid Inc, too much hassle with annual filings etc (been there done that) you just don’t need Inc features - e.g. will you have shareholders outside US etc?. Use LLC and common sense. Read something like “Own your own corporation” by Garrett Sutton. If you have lots of money use a lawyer. Otherwise first register LLC on line using one of many such services (like amerilawyer) or directly with your state, should be about $150. Don’t buy extras for registration. Next go to IRS web site and request EIN number for free, takes about 10 minutes. You will later use the state LLC number on state tax return an EIN number on federal return. Next open a bank account in LLC name. Make sure that you separate private finances from the LLC finances. Make sure that you sign all documents as
My Company Name LLC
by: FirstName LastName, Managing Member (or whatever title you give yourself on registration).
Once you start making money, hire tons of lawyers and accountants to take care of everything. :beer If your business fails, at least you will not loose much. Good luck!
And have CPA do your first year tax return, doing it with TurboTax looks easy until you screw up and pay way more in fines than in CPA fees :biggrin
Lots of traditional and conventional remarks to your question. Knowing the aggressive nature of ‘uncle sam’ one might ask why anyone would establish a corp or llc when that would give you one more exposure each year to them with the requirement of another tax return for that corp or llc.
One might look at establishing their business using a trust. I have personally read private letter rulings written by the revenue service which states no special return is required for a trust…not saying to do something less than honest with your taxes but why expose yourself to deceptive agencies an extra time when not needed.
Trusts can accomplish much the same as a corp without the extra exposure to the revenue service.
Hope this helps.
Rob