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Very, very much appreciated! I will read all of this right now and respond once more if I have any ideas. Editing my comment: Thanks again for the depth offer

by fridif 5y ago

Very, very much appreciated! I will read all of this right now and respond once more if I have any ideas. Editing my comment: Thanks again for the depth offered. I don't have any employees or physical products, so hopefully just Delaware or any other tax free state would be just fine. I have personal assets in a few states and I am married, so I understand that if I just follow the strict rules of not mixing funds and operations then I will not have my personal assets seized on this technicality. It sounds like the proper thing to do is make a lot of money and then incorporate. I don't mind paying the fees of a few grand, but that's actually just table stakes when compared to the cost of litigating a frivolous lawsuit like from a patent troll or people who make it their profession to sue businesses. I have heard that even with insurance and being apart of groups that band together to prevent themselves from the brunt of these costs, it still costs tens of thousands of dollars to protect yourself from a default judgment. I have a great business and great customers-- this legal risk does nothing but get in the way of that!

France_is_bacon 5y ago
It really depends on how much money you have. If you have a lot, there are things that you can do to protect yourself and your company. It's ok to make a lot of money and then incorporate, but if you already have customers and money, you might as well do it now. If your business is not complicated, then there are a lot of companies that will incorporate in any state for $50 (not including state filing fees - that cost depends on the state). https://www.swyftfilings.com/ https://www.swyftfilings.com/ A C corporation in California costs $49 for the Basic option. California state filing fee is $100, for a total of $149. So you don't have to pay a few grand to a lawyer in order to incorporate. Again, if it is an "easy" business, you can do it yourself. If you were building a nuclear power plant, you would want to get a lawyer to draw up the incorporation papers. I know you're not going to, but just giving an example. Depending on your business and situation, you want to incorporate as soon as possible. The reason is that if you don't incorporate for 2 years, and you do something that someone can sue you for, then they can come after you personally. They could even sue you personally for all your stock in your company and take over your company, because you own the stocks personally. So that is a consideration. So if your company is making $20K per month, just incorporate. But even if your business is making $1000 a month, if you make a mistake that someone can sue for, if they win a $500,000 lawsuit, they will be able to garnish future wages, take away any future earnings until you pay the judgement. Again, if you create different corporations, you can transfer all the very valuable assets to that company and put those assets beyond reach of any lawsuit. But, you should do it now. If you create a corporation after you are served with a lawsuit, the judge will see right through that and put those assets right back into the mix. So you put the company's assets in a separate corporation TODAY, and if someone sues you 5 years from now, that can cover you. So, for instance, you can start a marketing company up, that does all your marketing. If your company has a profit of $200,000, then you can pay marketing costs of $200,000 to the marketing company, and your main company has no money in it for anyone to sue you. But again, you can't do it last minute. You can start an internet company and have it create your website and pay them $200,000. You could start an IP company and license it's IP for $200,000 per year in order to get cash out of your company. Same thing for any other capital assets that you may own. A much bigger threat than a patent troll is insurance. I don't know if you will have employees, but much more important to have EPLI insurance, for example. You should have E&O insurance, which insures you if you f-ck up. Like if an accountant totally flucks up a company because they made a huge mistake, and costs their client $750,000, you better have E&O insurance. Computer programmers, lawyers and others must have E&O. But if you get the correct EPLI, you won't have to pay a dime for the lawsuit. Well, of course if you engage in purposeful malfeasance, then insuranced, corporations, or anything else will be null and void. This is for honest mistakes and accidents, never for rip offs. I'm not in any way saying you will, just giving you an accurate overview. I don't know what your business is, so I don't know about the risk. Is it a dangerous thing, like rock climbing or wingsuit, or crabbing in the Artic Ocean? Because then the risk is great. But if it is reselling feather pillows, I think you are worrying to much about lawsuits. But again, I don't know what industry you are in and how delivered. But again, the legal structures (separating out valuable assets into other corporations, insurance, etc) is important. But there are so many other greater risks. Embezzlement. How many companies have I worked with that have been embezzled. Sheesh - don't even worry about lawsuits until you understand everything about financial controls. That is a much greater risk for 98% of the companies out there. I just read about one even yesterday - a man embezzled more than $17 million in cash. https://duckduckgo.com/?q=examples+of+embezzlement&atb=v282-1&ia=web https://duckduckgo.com/?q=examples+of+embezzlement&atb=v282-... You have to rank risks accordingly. Don't assign in your mind that something is a huge risk, but it isn't. And don't rank something in your mind as a small risk, when it is actually huge. I don't know what this could be in your specific case, so you have to do that, or talk to accountants, insurance person, and lawyer to help you. That's the holy trinity of professionals you need, and get great ones, not huxsters.

by fridif 5y ago

France_is_bacon 5y ago

It really depends on how much money you have. If you have a lot, there are things that you can do to protect yourself and your company. It's ok to make a lot of money and then incorporate, but if you already have customers and money, you might as well do it now. If your business is not complicated, then there are a lot of companies that will incorporate in any state for $50 (not including state filing fees - that cost depends on the state). https://www.swyftfilings.com/ https://www.swyftfilings.com/ A C corporation in California costs $49 for the Basic option. California state filing fee is $100, for a total of $149. So you don't have to pay a few grand to a lawyer in order to incorporate. Again, if it is an "easy" business, you can do it yourself. If you were building a nuclear power plant, you would want to get a lawyer to draw up the incorporation papers. I know you're not going to, but just giving an example. Depending on your business and situation, you want to incorporate as soon as possible. The reason is that if you don't incorporate for 2 years, and you do something that someone can sue you for, then they can come after you personally. They could even sue you personally for all your stock in your company and take over your company, because you own the stocks personally. So that is a consideration. So if your company is making $20K per month, just incorporate. But even if your business is making $1000 a month, if you make a mistake that someone can sue for, if they win a $500,000 lawsuit, they will be able to garnish future wages, take away any future earnings until you pay the judgement. Again, if you create different corporations, you can transfer all the very valuable assets to that company and put those assets beyond reach of any lawsuit. But, you should do it now. If you create a corporation after you are served with a lawsuit, the judge will see right through that and put those assets right back into the mix. So you put the company's assets in a separate corporation TODAY, and if someone sues you 5 years from now, that can cover you. So, for instance, you can start a marketing company up, that does all your marketing. If your company has a profit of $200,000, then you can pay marketing costs of $200,000 to the marketing company, and your main company has no money in it for anyone to sue you. But again, you can't do it last minute. You can start an internet company and have it create your website and pay them $200,000. You could start an IP company and license it's IP for $200,000 per year in order to get cash out of your company. Same thing for any other capital assets that you may own. A much bigger threat than a patent troll is insurance. I don't know if you will have employees, but much more important to have EPLI insurance, for example. You should have E&O insurance, which insures you if you f-ck up. Like if an accountant totally flucks up a company because they made a huge mistake, and costs their client $750,000, you better have E&O insurance. Computer programmers, lawyers and others must have E&O. But if you get the correct EPLI, you won't have to pay a dime for the lawsuit. Well, of course if you engage in purposeful malfeasance, then insuranced, corporations, or anything else will be null and void. This is for honest mistakes and accidents, never for rip offs. I'm not in any way saying you will, just giving you an accurate overview. I don't know what your business is, so I don't know about the risk. Is it a dangerous thing, like rock climbing or wingsuit, or crabbing in the Artic Ocean? Because then the risk is great. But if it is reselling feather pillows, I think you are worrying to much about lawsuits. But again, I don't know what industry you are in and how delivered. But again, the legal structures (separating out valuable assets into other corporations, insurance, etc) is important. But there are so many other greater risks. Embezzlement. How many companies have I worked with that have been embezzled. Sheesh - don't even worry about lawsuits until you understand everything about financial controls. That is a much greater risk for 98% of the companies out there. I just read about one even yesterday - a man embezzled more than $17 million in cash. https://duckduckgo.com/?q=examples+of+embezzlement&atb=v282-1&ia=web https://duckduckgo.com/?q=examples+of+embezzlement&atb=v282-... You have to rank risks accordingly. Don't assign in your mind that something is a huge risk, but it isn't. And don't rank something in your mind as a small risk, when it is actually huge. I don't know what this could be in your specific case, so you have to do that, or talk to accountants, insurance person, and lawyer to help you. That's the holy trinity of professionals you need, and get great ones, not huxsters.