The second major area where asset protection is important is in business planning. Small businesses get sued frequently, making your business form of utmost importance. By choosing the wrong business form, or acting without the protection of a business form, you may find yourself personally liable for a judgment against your business and at risk of losing everything. The most common business forms for small businesses are limited partnerships, limited liability companies (LLCs), and corporations. Our lawyers will help you choose and form the right type of business for your operating and asset protection needs.
As the name suggest, a limited partnership will limit your exposure to liability now and help you avoid losses to your business and family in the future. A limited partnership prevents creditor access to any property that is titled to the limited partnership, and will also prevent creditors from inspecting the partnershipís books and records. A limited partnership consists of general partners and limited partners. The benefits of a limited partnership only apply to the limited partner, who is more passive. The general partner still has liability to creditors.
If you are more of a passive investor, the limited partnership may be the right fit, but if you are controlling the day-to-day activities and really running the company, a different business form is likely better to protect your assets. An LLC has all of the same asset protection benefits of a limited partnership, while protecting all members, instead of just a certain class. Only multi-member LLCs receive these benefits, so you must have more than one person in your company.
If your company is going to have a large number of members or you want to structure control in a very specific way, forming a corporation might be the best option for you. A corporation can limit your exposure to lawsuits and reduce your overall liabilities. Like an LLC, a corporation is a separate legal entity. Shareholders of the corporation have no personal liability for the corporationís actions. Not only do corporations pay at a favorable tax rate, but you may also have tax benefits, either as the owner or in the form of personal income tax deductions. Furthermore, shares of stock may act as an incentive to attract employees or investors. Corporate law in Florid allows for different classes of stock, giving a monetary benefit to the shareholders while still allowing you to maintain control of the company. Our lawyers are able to draft all of the necessary formation and operating documents you will need to create your business and have it structured as you need.
As previously mentioned, LLCs and corporations are separate legal entities. This designation is great for you from an asset protection standpoint, but it also means that your business will continue on after your gone. If you do not plan for this ahead of time, your business could greatly suffer or even be dissolved following your death. Business succession planning allows for a timely settlement of the deceasedís estate, both by avoiding probate and eliminating the estate tax. Specifically, business succession planning ensures an agreeable price for a partnerís share or shareholderís stock of the business. This eliminates the need for valuation upon death because the price has already been agreed upon. Life insurance policy benefits will be immediately available to pay for the deceased share of the business, preventing any liquidity issues or time constraints. This money also prevents an external takeover or the need to sell business assets in order to cover the costs of the partnerís share. Our lawyers are trained to examine all aspects of business planning and see to it that all possible issues are addressed.
For more information on successful Florida business asset protection techniques, please contact the South Florida law firm of Wild Felice & Partners, P.A. at 954-944-2855 to schedule your free consultation. It’s a Wild world. Are you protected?