Protecting Yourself From Your Investments and Your Business
In keeping with the American Dream, we saw an extraordinary rise in the number of individuals who were going into business for themselves in the last few years. The outlook looks positive for this trend to continue.
Obviously, one of the most difficult issues facing a new business (or for that matter any existing sole proprietorship) is the question of whether or not to form a business entity to protect your personal assets from the activities of the business. Since late 1993, the limited liability company has been the preferred business entity to meet this need. The limited liability company provides all of the limited liability protection of a corporation while, simultaneously, being taxed either as a sole proprietorship, a partnership or a corporation. The key question that any business owner must ask himself or herself is whether or not the business or their employees may place their personal assets at risk. If the answer is yes, then a business entity must be seriously considered.
In 1999, the Connecticut State Legislature helped to make the limited liability company a preferred business entity for real estate investments as well. Previously, if you owned real estate investment property in your own name and wished to transfer it into a limited liability company, you had to pay the conveyance taxes just as if you had sold the property to someone else. On a property with a value of $100,000.00 the conveyance taxes would equal $750.00. In October, 1999, the Legislature made a transfer of real property from an individual(s) to a limited liability company exempt from conveyance tax, so long as, the same individuals had the same ownership interest in the limited liability company. Now, for only the cost of the Quit Claim Deed, you can receive all of the protections of the limited liability company for your real estate investment property.
If you own investment property, it is well worth investigating the use of the limited liability company and the protections that it can provide.
Take the time in the coming year to review your business and your investments. Are you adequately protected from the risks they may involve? If not, you should take a serious look at using the limited liability company to protect your personal assets from both your investments and your business.
THE ABOVE ARTICLE IS FOR GENERAL INFORMATION ONLY. IT SHOULD NOT BE RELIED UPON AS LEGAL ADVICE, AND CANNOT REPLACE CONSULTATION WITH A PRACTICING ATTORNEY !