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When looking for a way to safeguard your assets, choosing a business structure is crucial. There are several legal structures designed to provide asset protection, each offering varying levels of security and benefits.
Legal guidance can be helpful in determining the best business structure among the following that will align with your specific asset protection needs and objectives.
1. S Corporations
An S corporation is a business entity that provides liability protection for its shareholders, meaning personal assets are normally protected from business-related debts and claims. This structure allows both profits and losses to pass through directly to shareholders’ personal tax returns, potentially reducing overall tax liability.S corporations can also offer credibility and can be advantageous for small to medium-sized businesses seeking to protect personal assets while enjoying favorable tax treatment. However, there are restrictions on the number and type of shareholders, which may influence its suitability for certain businesses.
2.Limited partnership
Since limited partnerships have no personal liability for the limited partners, they can provide strong asset protection for individuals who invest in the business but do not participate in its day-to-day operations. This can be advantageous for those seeking to protect their personal assets while maintaining a level of involvement in the business, although it does require careful delineation of the roles and responsibilities of each partner.
3. Limited liability corporations
Also known as LLCs, these business structures offer robust asset protection by separating personal assets from business liabilities. LLCs shield members (owners) from personal liability for business debts and legal claims, making them a popular choice for many entrepreneurs. The flexibility of an LLC allows for various management structures and tax options, including pass-through taxation. LLCs are also fairly simple to set up and maintain compared to other structures, providing both protection and ease of operation for small to medium-sized businesses.
Seeking legal guidance can help you to choose the structure that best suits your needs. Contact us online or call today for a free consultation with Pennington Law, PLLC.
