Asset Protection: Protect your privacy and personal wealth

There are two key considerations very few entrepreneurs account for until it’s too late: privacy and protection. When operating a business under an informal structure, your personal information and assets are available for the taking if someone really wants them. 

With a formal business entity, most states require that you establish a registered agent. Many states will allow you to be your own registered agent, but that keeps your name and contact information in the public eye. If you want to protect your privacy, we recommend using a third-party registered agent. When you appoint a third-party registered agent, the name and address listed on your entity’s public record is no longer your own. The registered agent will receive formal communications such as legal service of processes or notices from the state and forward them on to your personal address.

To protect your personal assets, we recommend that you establish a formal business entity. Commonly referred to as “the corporate veil of protection,” an LLC or other business entity provides separation between your personal wealth and the assets related to the business. The unfortunate reality is that there are an average of 76 lawsuits filed every minute in the United States. No one wants to get sued, but it’s unfortunately not outside the realm of possibility. Establishing a business entity will ensure that your personal assets are not on the line in the event of legal action.

Tax Savings: Keep your hard-earned cash

When you think about taxes, you probably do one of two things: cringe or yawn. We know that taxes aren’t a particularly sexy topic…but if you don’t have a proper business entity structure, you are potentially giving the IRS thousands of dollars more than necessary. 

The tax code was designed to benefit business owners and entrepreneurship. In fact, there are more than 250 tax deductions available to the average business owner. Some of them are relatively intuitive—business-related travel expenses, office supplies, contractor fees, and so on. But there are lots of creative tax strategies that most people don’t think about.

For example, the Augusta Rule allows your business to rent your own home, creating a deductible expense for your business and a tax-free income for yourself. Or you can buy a work related vehicle—anything from a work truck to a private jet—and write off the depreciation for major tax savings. You can even pay your own kids without creating a tax liability for them while leveraging the expense as a deduction. Of course these types of deductions are extremely nuanced, so we recommend having a professional help determine which tax strategies are best for you.