After speaking with two attorneys this week one told me i should use and LLC,but he said that there is a new law coming on the books in January where as you will be taxed on the gross receipts. He also said i should have an insurance policy to cover any misfortunes.
Another attorney said i should use and LLP to safeguard assets along with and insurance bond which would cost about $500.00 per year. He said the LLP does not require as much maintence and cannot be periced as easily.
Can anyone help in this matter. Where do the expenses stop,but also protect yourself?
Cannot anyone these be periced at any time with asset disclosure after being sued.
Insurance is great and you should always have liability coverage. But what’s going to happen when the judgement blows through the limit? Grandma got $10 million for a spilled cup of coffee.
LLP is not preferred because it MUST be taxed as a partnership. The LLC can be taxed as an S-corp, saving you significant taxes if the company spins off enough income to pay a salary. Otherwise, there isn’t much difference in terms of protection.
More maintenance? Give me a break. He’s gonna need to explain THAT one.
Nothing is going to give you 100% protection. So you have to make it as difficult (that means “time” and that means “money” to an atty) as possible for ther other side. You own no assets, so they can’t sue you and get anything. The property is in a trust and they can’t find out the beneficiary. If they do get the judge to set aside the trust, they find the bene is an LLC. The LLC is personal property, so they can’t gain control of the assets. The best they can get is a charging order, that you can frustrate while “they” pay all of your taxes for you. So that’s no good for them. So maybe they try to pierce the LLC. And ALL of this takes TIME and costs the atty MONEY for maybe NOTHING at the end.
All of this is possible…possible…but the harder you make it the better off you are.
First thing an atty does is an asset search. If you own six properties in your name and three of them have no mortgage then guess what…he’ll take the case on contingency. You have assets and maybe you’ll settle and he’ll get paid.
OR, he finds no assets, maybe turns up a trust with your name on it. Now he doesn’t know how he’s going to get paid but he does know it’ll take a lot of his time. He’ll still take the case…for a $5,000 retainer. Betty Sue doesn’t have that kind of cash, so she goes away. He wants to find easier fish to catch.
That’s a MUCH better outcome for you.
And what does that cost you for protection? Maybe $1,000 a year for additional accounting and tax work. Your call.