“Avoid Business Growth Mistakes”by Andrew Miles, Esq.. Business Growth Mistake #2
The first strategy I want you to understand and implement is you need to separate your personal assets from your business assets by putting them into a corporation. You want to get your home, car, and your bank account—your personal assets—into a different entity than your business. By entity, I mean corporations, limited liability companies, and limited partnerships.) We typically do that by taking your business and putting it into -- let’s say a corporation, or an LLC, which is seen as a separate legal entity by law. Why separate them? Because if you don’t you could lose everything you own in a lawsuit. I will share the shocking statistics on getting sued later in this report. By separating your personal assets from your business assets you contain any potential liability that your business could create. You effectively keep it from contaminating your personal assets or other businesses assets. You are building a legal barrier between you and your business. Importantly this barrier also acts like a fortress. It protects your business from outside attacks too. The second strategy is to separate your businesses from each other. This is the step Patrick did not take and he is still paying for his mistake -- some twelve years later!
I Can Do It All Myself!So, you may be thinking: “I’m smart; I’m a good businessperson. I’m going to set up my own entities, my own corporation, my own LLC.” Yeah, you can do that. You can also build your own car, or your own airplane! You can probably perform minor surgery on yourself too! My strong recommendation is that you work with a professional. Get the help of an expert who knows this subject matter inside and out and can help you custom tailor your entity(s) to your individual needs and make sure all the I’s are dotted and T’s are crossed. For your information – when I was practicing law my specialty was collecting cash and assets for my business clients. I saw first hand how many mistakes and gaping holes people leave for lawsuits when they improperly set up a corporation. That’s why I’m telling you to work with someone who will guide you step by step and keep you from making unnecessary and costly mistakes. If you do choose to setup your own entity good luck. Be sure to follow your state and local requirements, and update your entity every year. Be aware that unless you know the ins and outs of corporations, corporate law, contract law and related tax advantages, you’ll miss out on the greatest benefits a corporation can offer you. That’s why I recommend you work with a professional. Enough said! Now here’s the next step… Take Action Now Before It’s Too Late! You’ve got to take the proper actions to get your businesses and your real estate into your corporation before there’s a problem. If you transfer your property or your business into a corporation before there’s a problem, it’s called planning. If you make transfers after the problem… it’s called fraud, and it’s illegal! The point is you need to learn how set your corporation up properly right from the start… before it’s too late!
Keep the Process Simple Here is an example of a student and colleague of mine. Greg is doing some real estate investing in Florida. All the old orange groves are being sold to developers, so seeing the opportunity… he’s purchasing three groves. He came to me and said, “I want to protect myself from loss but I want to keep it as simple as possible.” That is the key here. You don’t go out and set up five, six, or ten entities at once and then figure out what to do with them. You do it logically and simply… step by step.
Here is the plan I laid out for Greg: I said “Greg if you are buying three separate groves, then let’s put those three groves in three separate LLCs or limited partnerships.” That is simple enough and we just did that. His next step down the line is to develop the land. When you do a subdivision of real estate, often you will bring utilities, roadways, cable, lights, sewers, and so on. When he gets to that point, we will set up another corporation, another entity for each grove, just to handle that progress. If there is a problem with any of the subcontracts for one grove he’s developing, his other groves will be fully protected from claims because they are all legally separated from each other. If Patrick had only listened he would still be in business and likely still married to his wife. Even though Greg is a savvy real-estate developer, he knew he needed help developing an organized plan to protect his assets. Most of us tend to procrastinate on issues like this, in the hopes that it won't ever effect us. But, by the time you're sued, it's already Too Late!
I urge you to take action now! I’d love to help you implement these lessons and other wealth building strategies of the rich. For details on my coaching program that takes you by the hand and walks you through every important detail required to protect yourself click here now.
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