California Asset Protection – What Does Asset Protection Mean?
Asset protection is intended to protect assets from the reach of creditors, without having to engage in asset concealment or other potentially illegal acts. A professional asset protection plan is an absolute necessity.
Many of the asset protection opportunities implemented by people are commonly used in business and estate planning. These opportunities can encompass trusts, corporations, limited liability companies, and other protections unique to the given situation.
Strength of Asset Protection in California
The State of California has earned a less than favorable reputation in regard to asset protection. Because the California does not allow many of the opportunities afforded to those in other States, the need for an asset protection plan is often far greater. Unfortunately, many people fail to realize the need for an asset protection plan until it is too late.
Because every situation is unique, the proper asset protection vehicle you should implement will be determined after meeting with The Estate Planning Law Firm and discussing not only your current situation, but also your future goals.
When starting a business, decisions must be made as to the type of business structure that will be utilized to establish the business. The type of business structure in large part will determine which income tax return form you have to file.
The most common forms of business structures are sole proprietorship, partnership, corporation, S corporation, and a Limited Liability Company (LLC).
Sole Proprietor ships – A sole proprietor is a business that is owned by an individual and is unincorporated. However, if you are the sole member of a domestic limited liability company (LLC), you are not a sole proprietor if you elect to treat the LLC as a corporation.
Partnerships – A partnership is the business relationship between more than one person, designed to do trade or business. Each member of the partnership contributes money, property, labor or skill, and shares in both profits and losses of the business partnership.
Corporations – In forming a corporation, prospective shareholders exchange money, property, or both, for the corporation’s capital stock. A corporation typically takes the same deductions as a sole proprietorship when determining the corporation’s taxable income. A corporation can also take various tax deductions. For federal income tax purposes, a C corporation is recognized as a separate taxpaying entity. A corporation conducts business, realizes net income or loss, pays taxes and distributes profits to shareholders.
S Corporations – S corporations are a type of corporation that pass corporate income, losses, deductions, and credits to the corporate shareholders for federal tax purposes. Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates. This allows S corporations to avoid double taxation on the corporate income. S corporations are responsible for tax on certain built-in gains and passive income at the entity level.
Limited Liability Company (LLC) – A Limited Liability Company (LLC) is a business structure authorized by state statute. Because each state may have different regulations, you should determine what is best for you in a given state, before moving forward with a Limited Liability Company.
For additional information, refer to Small Business Administration’s
CALIFORNIA ASSET PROTECTION & BUSINESS PLANNING
When business owners ponder the growth of their company, asset protection and business planning generally do not appear on the list of things to do in order to obtain business growth.
Ironically, asset protection and business planning are two of the most important things you can do to grow your business and create security for the future. All owners of businesses need business plans that include mechanisms for asset protection and business planning.
The Estate Planning Law Firm will assist you in your efforts to make the most effective use of available options. Regardless of whether you are managing a startup, or an established business, implementing the proper asset protection and business plans are vital to long term success.
To determine which potential opportunities you should consider implementing, contact The Estate Planning Law Firm, at 714-805-9229. After discussing your unique situation with you, we can help you better understand what asset protection and business planning encompasses, and when it is necessary.
What is Asset Protection and Business Planning?
Asset protection and business planning can be processes that complement each other butmust be crafted to fit the unique goals of your business, your current situation, and your future goals. The Estate Planning Law Firm can help you:
- Draft contracts;
- Create contingency plans for your business in case of incapacity;
- Craft an asset protection plan;
- Craft a plan that will allow you to transfer your assets;
- Craft a plan to avoid overpaying on estate taxes;
The Estate Planning Law Firm understands the various opportunities accessible to those that want to achieve and maintain financial security.
How do you know when asset protection and business planning are necessary?
Asset protection and business planning are necessary when someone is trying to obtain the greatest financial security possible for assets they have obtained and seek to obtain.
Asset protection is also necessary for owners of businesses that seek to avoid financial disaster as a result of lawsuits, catastrophic events, or the conduct of those you do business with.
The Estate Planning Law Firm can help you to determine the threats to your financial and business success, while guiding you through the process of implementing all available legal tools to help reduce the potential for economic disaster.
We Can Help You
The Estate Planning Law Firm strives to develop long lasting relationships with members of the community. We understand how difficult it is to create a business and build wealth and strive to assist you in your efforts to protect what you have worked to achieve/obtain. Call The Estate Planning Law Firm today at (714) 805-9229 to schedule an appointment.