If you understand the advantages of having an LLC with members as I do, you may wonder how to structure an LLC when you have more than one company. Many business people think that if they start another business they need to form another LLC.

I have had both a C Corp and an S Corp in traditional businesses, but I would never do it again as an LLC provides much more asset protection than either a C Corp or an S Corp. This could be a concern if you have assets to protect.

I advise my clients to form an umbrella company that is an LLC with members who have an equity interest in the corporation.

Two clients of mine each set up their own LLC with a 95% equity interest and another member with a 5% equity interest. They both became each other's 5% equity interest since neither was married, had no significant other nor children.

I used the creation of my LLC as an umbrella company. I have several businesses (actually money making activities) as part of my LLC and all of the revenue and expenses from each of these activities flows up to the LLC for tax and reporting purposes.

When I start another business activity I w

When you run a business and sell a product or service as a sole proprietorship you will have a ton of liability. A sole proprietorship is the second worse form of asset protection after a general partnership.

A general partnership as a business structure is not good because when 8 physicians work together in a combined medical practice all 8 partners are liable for the misdeeds of any one of the partners.

The situation is not much better in a sole proprietorship because when you are sued and end up with a judgment for damages against you, you could lose your business and also your house, cars and everything else.

Business people use a C Corporation or an S Corporation for asset protection because when sued in the same situation (looking at a judgment), the owner of the judgment may get your business but may not get your personal assets.

The basic difference between a C Corp and an S Corp is that in an S Corp the tax consequences of the business pass through to your personal tax return.

When you are getting started in business, or operating a small business, achieving asset protection seldom works because lenders will not loan you money in a C Corp or S Corp without you personally guaranteeing the note.

So asset protection in a C Corp or S Corp is not automatic. The corporate veil (so to speak) is pierced much more than it protects.

I much prefer a Limited Liability Company (LLC) that is not a sole LLC but has other members (with an equity interest) attached, and you run the LLC as its Manager.

In this arrangement, you have much more liability protection than in a C Corp or an S Corp because payment of a judgment against you may not be automatic.

When you create your LLC with accompanying Articles of Formation your asset protection may increase if you insert a judgment creditor clause among your articles. In many states you will acquire more asset protection.

The last time I checked, about half of the states allow a judgment creditor clause, and half do not (California being one).

Adding a judgment creditor clause has no affect upon your being sued or receiving a judgment against you. What adding a judgment creditor clause does do is create a question about whether the LLC so formed has to pay the judgment timely.

If, in the unfettered discretion of the Manager of the LLC paying the judgment would cripple or destroy the LLC in its operation, then the judgment would not be paid until the LLC disbands, at which point the judgment would have to paid from the remaining assets.

Why? Because the other members of the LLC, the members with an equity interest who had nothing to do with being a party to the suit against any one member of the LLC, would be damaged by payment of the judgment, and their interests must be protected.

You may be interested to know that the Internal Revenue Service (IRS) does not recognize an LLC as a business structure in and of itself, they only recognize it as a corporation which is what it is.

This is why when you set up an LLC as a solo LLC (single person corporation) you will be filing a different tax form than if you set up an LLC with members, in which case you would be filing a Form 1065.

If you create a solo LLC you will not have the same protection as if you create an LLC with members.

When I ask an attorney what is the best form of asset protection and he or she says to buy an insurance policy, I can not sprint away fast enough in the opposite direction. Their answer belies their knowledge of the subject.

I have found the vast majority of attorneys to be pretty useless as their understanding of asset protection issues is marginal at best.

It has been my experience that many attorneys today are so busy trying to make their second million, or simply trying to survive in practice, that they do not have the time or interest to keep current in their profession.

Professionals in this position are consumed by the need for profits to either pay their bills or create enough wealth to retire early.

If you want to have some fun, open up the yellow pages in your local phone book, and in the listings where the attorneys pay to be put under a certain category (such as business law or divorce actions), look up asset protection and see how many are listed.

I did this in an area of 500,000+ population, and there was not even a category for asset protection, much less a single listing. Asset protection is not an area of law that is widely practiced, much less understood by many attorneys.

If you understand the advantages of having an LLC with members as I do, you may wonder how to structure an LLC when you have more than one company. Many business people think that if they start another business they need to form another LLC.

I have had both a C Corp and an S Corp in traditional businesses, but I would never do it again as an LLC provides much more asset protection than either a C Corp or an S Corp. This could be a concern if you have assets to protect.

I advise my clients to form an umbrella company that is an LLC with members who have an equity interest in the corporation.

Two clients of mine each set up their own LLC with a 95% equity interest and another member with a 5% equity interest. They both became each other's 5% equity interest since neither was married, had no significant other nor children.

I used the creation of my LLC as an umbrella company. I have several businesses (actually money making activities) as part of my LLC and all of the revenue and expenses from each of these activities flows up to the LLC for tax and reporting purposes.

When I start another business activity I wi

ders will not loan you money in a C Corp or S Corp without you personally guaranteeing the note.

So asset protection in a C Corp or S Corp is not automatic. The corporate veil (so to speak) is pierced much more than it protects.

I much prefer a Limited Liability Company (LLC) that is not a sole LLC but has other members (with an equity interest) attached, and you run the LLC as its Manager.

In this arrangement, you have much more liability protection than in a C Corp or an S Corp because payment of a judgment against you may not be automatic.

When you create your LLC with accompanying Articles of Formation your asset protection may increase if you insert a judgment creditor clause among your articles. In many states you will acquire more asset protection.

The last time I checked, about half of the states allow a judgment creditor clause, and half do not (California being one).

Adding a judgment creditor clause has no affect upon your being sued or receiving a judgment against you. What adding a judgment creditor clause does do is create a question about whether the LLC so formed has to pay the judgment timely.

If, in the unfettered discretion of the Manager of the LLC paying the judgment would cripple or destroy the LLC in its operation, then the judgment would not be paid until the LLC disbands, at which point the judgment would have to paid from the remaining assets.

Why? Because the other members of the LLC, the members with an equity interest who had nothing to do with being a party to the suit against any one member of the LLC, would be damaged by payment of the judgment, and their interests must be protected.

You may be interested to know that the Internal Revenue Service (IRS) does not recognize an LLC as a business structure in and of itself, they only recognize it as a corporation which is what it is.

This is why when you set up an LLC as a solo LLC (single person corporation) you will be filing a different tax form than if you set up an LLC with members, in which case you would be filing a Form 1065.

If you create a solo LLC you will not have the same protection as if you create an LLC with members.

When I ask an attorney what is the best form of asset protection and he or she says to buy an insurance policy, I can not sprint away fast enough in the opposite direction. Their answer belies their knowledge of the subject.

I have found the vast majority of attorneys to be pretty useless as their understanding of asset protection issues is marginal at best.

It has been my experience that many attorneys today are so busy trying to make their second million, or simply trying to survive in practice, that they do not have the time or interest to keep current in their profession.

Professionals in this position are consumed by the need for profits to either pay their bills or create enough wealth to retire early.

If you want to have some fun, open up the yellow pages in your local phone book, and in the listings where the attorneys pay to be put under a certain category (such as business law or divorce actions), look up asset protection and see how many are listed.

I did this in an area of 500,000+ population, and there was not even a category for asset protection, much less a single listing. Asset protection is not an area of law that is widely practiced, much less understood by many attorneys.

If you understand the advantages of having an LLC with members as I do, you may wonder how to structure an LLC when you have more than one company. Many business people think that if they start another business they need to form another LLC.

I have had both a C Corp and an S Corp in traditional businesses, but I would never do it again as an LLC provides much more asset protection than either a C Corp or an S Corp. This could be a concern if you have assets to protect.

I advise my clients to form an umbrella company that is an LLC with members who have an equity interest in the corporation.

Two clients of mine each set up their own LLC with a 95% equity interest and another member with a 5% equity interest. They both became each other's 5% equity interest since neither was married, had no significant other nor children.

I used the creation of my LLC as an umbrella company. I have several businesses (actually money making activities) as part of my LLC and all of the revenue and expenses from each of these activities flows up to the LLC for tax and reporting purposes.

When I start another business activity I w

timely.

If, in the unfettered discretion of the Manager of the LLC paying the judgment would cripple or destroy the LLC in its operation, then the judgment would not be paid until the LLC disbands, at which point the judgment would have to paid from the remaining assets.

Why? Because the other members of the LLC, the members with an equity interest who had nothing to do with being a party to the suit against any one member of the LLC, would be damaged by payment of the judgment, and their interests must be protected.

You may be interested to know that the Internal Revenue Service (IRS) does not recognize an LLC as a business structure in and of itself, they only recognize it as a corporation which is what it is.

This is why when you set up an LLC as a solo LLC (single person corporation) you will be filing a different tax form than if you set up an LLC with members, in which case you would be filing a Form 1065.

If you create a solo LLC you will not have the same protection as if you create an LLC with members.

When I ask an attorney what is the best form of asset protection and he or she says to buy an insurance policy, I can not sprint away fast enough in the opposite direction. Their answer belies their knowledge of the subject.

I have found the vast majority of attorneys to be pretty useless as their understanding of asset protection issues is marginal at best.

It has been my experience that many attorneys today are so busy trying to make their second million, or simply trying to survive in practice, that they do not have the time or interest to keep current in their profession.

Professionals in this position are consumed by the need for profits to either pay their bills or create enough wealth to retire early.

If you want to have some fun, open up the yellow pages in your local phone book, and in the listings where the attorneys pay to be put under a certain category (such as business law or divorce actions), look up asset protection and see how many are listed.

I did this in an area of 500,000+ population, and there was not even a category for asset protection, much less a single listing. Asset protection is not an area of law that is widely practiced, much less understood by many attorneys.

If you understand the advantages of having an LLC with members as I do, you may wonder how to structure an LLC when you have more than one company. Many business people think that if they start another business they need to form another LLC.

I have had both a C Corp and an S Corp in traditional businesses, but I would never do it again as an LLC provides much more asset protection than either a C Corp or an S Corp. This could be a concern if you have assets to protect.

I advise my clients to form an umbrella company that is an LLC with members who have an equity interest in the corporation.

Two clients of mine each set up their own LLC with a 95% equity interest and another member with a 5% equity interest. They both became each other's 5% equity interest since neither was married, had no significant other nor children.

I used the creation of my LLC as an umbrella company. I have several businesses (actually money making activities) as part of my LLC and all of the revenue and expenses from each of these activities flows up to the LLC for tax and reporting purposes.

When I start another business activity I w

an insurance policy, I can not sprint away fast enough in the opposite direction. Their answer belies their knowledge of the subject.

I have found the vast majority of attorneys to be pretty useless as their understanding of asset protection issues is marginal at best.

It has been my experience that many attorneys today are so busy trying to make their second million, or simply trying to survive in practice, that they do not have the time or interest to keep current in their profession.

Professionals in this position are consumed by the need for profits to either pay their bills or create enough wealth to retire early.

If you want to have some fun, open up the yellow pages in your local phone book, and in the listings where the attorneys pay to be put under a certain category (such as business law or divorce actions), look up asset protection and see how many are listed.

I did this in an area of 500,000+ population, and there was not even a category for asset protection, much less a single listing. Asset protection is not an area of law that is widely practiced, much less understood by many attorneys.

If you understand the advantages of having an LLC with members as I do, you may wonder how to structure an LLC when you have more than one company. Many business people think that if they start another business they need to form another LLC.

I have had both a C Corp and an S Corp in traditional businesses, but I would never do it again as an LLC provides much more asset protection than either a C Corp or an S Corp. This could be a concern if you have assets to protect.

I advise my clients to form an umbrella company that is an LLC with members who have an equity interest in the corporation.

Two clients of mine each set up their own LLC with a 95% equity interest and another member with a 5% equity interest. They both became each other's 5% equity interest since neither was married, had no significant other nor children.

I used the creation of my LLC as an umbrella company. I have several businesses (actually money making activities) as part of my LLC and all of the revenue and expenses from each of these activities flows up to the LLC for tax and reporting purposes.

When I start another business activity I w

If you understand the advantages of having an LLC with members as I do, you may wonder how to structure an LLC when you have more than one company. Many business people think that if they start another business they need to form another LLC.

I have had both a C Corp and an S Corp in traditional businesses, but I would never do it again as an LLC provides much more asset protection than either a C Corp or an S Corp. This could be a concern if you have assets to protect.

I advise my clients to form an umbrella company that is an LLC with members who have an equity interest in the corporation.

Two clients of mine each set up their own LLC with a 95% equity interest and another member with a 5% equity interest. They both became each other's 5% equity interest since neither was married, had no significant other nor children.

I used the creation of my LLC as an umbrella company. I have several businesses (actually money making activities) as part of my LLC and all of the revenue and expenses from each of these activities flows up to the LLC for tax and reporting purposes.

When I start another business activity I will not have to create another business structure. If I were a real estate investor I might create an LLC for each property, but I do not currently invest in real estate.

If the new business activity makes money I continue to build it, if it does not, I dump it and try something new. I am interested in building multiple streams of income, that is one reason why I started an Internet Marketing business.

Since the laws regarding limited liability companies vary from state to state, it never hurts to talk to an attorney. I simply do not take an attorney's advice unless he or she is willing to share the thought process and belief system, and is willing to answer any and all of my questions and concerns to my satisfaction.

Copyright © 2007 Ed Bagley