Indemnification or hold harmless clauses typically provide that a client will indemnify or hold the CPA firm harmless in the event the firm sustains a loss resulting from claims arising from the CPA’s work. Indemnification clauses are typically intended to limit liability when client management knowingly makes misrepresentations to the CPA, causes or participates in fraud, conceals information from the CPA, or otherwise misleads the CPA.
Where permitted and enforceable, indemnification and hold harmless clauses can provide valuable protection to CPAs. They not only serve as a deterrent against a client considering a potential claim against a CPA, but also can be used to require the client to indemnify the CPA for attorney fees and costs, as well as the costs of any judgments or awards arising from claims made against the CPA by third parties. In addition to indemnification or hold harmless clauses, some CPAs use limitation of liability clauses, which typically limit the CPA’s liability to a portion of their fee or a defined dollar value.
Can You Use Them in Your Engagement Letters?
The answer is yes, except when prohibited by applicable law, regulation, or ethics rules. The SEC, federal banking regulators and many state insurance departments prohibit indemnification or limitation of liability arrangements between the regulated entities and CPA firms performing audit or other attest services. According to AICPA Ethics Interpretation 501-8¹, use of indemnification and liability limitation clauses disregarding the rules and requirements of regulators would be considered an ethics violation.
As a result, when considering the use of indemnification and liability limitation clauses in an audit or other attest engagement letter, if the client is in a regulated industry, check for regulatory rules prohibiting the use of these clauses. AICPA ethics rules also apply. With respect to indemnification and limitation of liability clauses, an AICPA Ethics Ruling indicates that clauses which limit liability resulting from knowing misrepresentations by client management do not impair independence.² Accordingly, if indemnification clauses are limited in this manner and are not prohibited by regulation, they are permissible in engagement letters for attest services.
For non-attest services, there are typically no restrictions on the use of indemnification and liability limitation clauses in engagement letters. The terms in those clauses are subject to negotiation between the CPA and client. While CPAs usually prefer the use of such clauses, they often face resistance from their clients. So, it’s necessary to explain the rationale for using those clauses to clients. For example, in engagements to prepare a compilation report for management use only, you can explain that because your work product is intended solely for their use, your firm should not be responsible for claims arising from use by others.
Additionally, many states that have adopted a strict privity standard that prohibits third party lawsuits against a CPA firm unless there is evidence to show that the firm was aware that its work product would be provided to that third party³. In the non-attest engagement letter, you can both restrict the use and distribution of work product and include an indemnification clause applicable to claims made by third parties. If the client gives your work product to a third party without your consent and the third party later files a claim against you, you will have afforded your firm a valuable defense and in addition, the client will be required to indemnify you in connection with any expenses and costs associated with the claim.
Are They Legally Enforceable?
In addition to ensuring that you can use indemnification and liability limitation clauses in an engagement letter without violating applicable law, regulations, or ethics rules, you need to know whether such clauses are enforceable in the applicable jurisdiction.
The enforceability of such clauses is often a question of equity and public policy, subject to the dictates of the controlling legal jurisdiction. In many jurisdictions, an important enforceability factor is the ability to show that such clauses were negotiated between two parties with relatively equal bargaining power, and that the clauses were clearly set forth in the engagement letter, and understood and consented to by both parties to the agreement.
Engage the client in a frank upfront discussion about the concept of equitable risk allocation, and document it in your client and engagement acceptance file. You may point out to the client that without indemnification, hold harmless and liability limitation clauses, your fees will be higher to compensate for the elevated risks. Consult with your attorney about both the extent and wording of such clauses prior to presenting them to clients. Depending on the advice of your attorney, you may be able to offer your services for different fees with and without such clauses. Providing the client with the option may serve as evidence that the clauses were negotiated and not forced upon the client.
Can You Indemnify Your Client?
Another question often raised by CPAs is whether they can indemnify or defend their client for damages, losses or costs incurred by the client relating to their services, if requested by the client. This typically occurs when a governmental entity presents a contract to the CPA firm covering proposed services. Under AICPA Ethics Ruling 102, Indemnification of a Client4, indemnifying the client for damages, losses, or costs arising from lawsuits, claims, or settlements that relate, directly or indirectly, to client acts impairs independence. If a client requests such provision in connection with non-attest engagements, consult your professional liability insurance agent prior to entering into the agreement, as most professional liability policies exclude coverage for liability assumed when entering into a professional services agreement. Additionally, always consult your attorney prior to entering into any agreement to indemnify, defend or hold harmless another party in connection with your professional services.
Summary
Where permissible, CPAs should consider using indemnification, hold harmless and limitation of liability clauses in engagement letters to limit their liability to clients and third parties. No single clause or wording is appropriate in all situations. Instead, clauses should be tailored to fit individual client situations and the assessed risks. As noted above, the enforceability of indemnification and limitation of liability clauses differs among legal jurisdictions. In certain locales, specific wording may be needed for the clause to be legally binding. CPAs contemplating the use of such clauses in engagement letters should consult with their attorney regarding both the wording to be used and enforceability under applicable law.
August 2008
CNA, Accountants Professional Liability Risk Control, 333 S. Wabash Ave., Chicago, IL 60604
The purpose of this article is to provide information, rather than advice or opinion. It is accurate to the best of the authors’ knowledge as of the date of the article. Accordingly, this article should not be viewed as a substitute for the guidance and recommendations of a retained professional. In addition, CNA does not endorse any coverages, systems, processes or protocols addressed herein unless they are produced or created by CNA.
Any references to non-CNA Web sites are provided solely for convenience, and CNA disclaims any responsibility with respect to such Web sites.
To the extent this article contains any examples, please note that they are for illustrative purposes only and any similarity to actual individuals, entities, places or situations is unintentional and purely coincidental. In addition, any examples are not intended to establish any standards of care, to serve as legal advice appropriate for any particular factual situations, or to provide an acknowledgement that any given factual situation is covered under any CNA insurance policy. Please remember that only the relevant insurance policy can provide the actual terms, coverages, amounts, conditions and exclusions for an insured. All CNA products and services may not be available in all states and may be subject to change without notice.
Continental Casualty Company, one of the CNA insurance companies, is the underwriter of the AICPA Professional Liability Insurance Program.
CNA is a service mark registered with the United States Patent and Trademark Office. Copyright © 2008 CNA. All rights reserved.
[1] AICPA Ethics Interpretation 501-8, Failure to Follow Requirements of Governmental Bodies, Commissions, or Other Regulatory Agencies on Indemnification and Limitation of Liability Provisions in Connection with Audit and other Attest Services (effective July 1, 2008). The interpretation is available at: http://www.aicpa.org/download/ethics/EDITED_Adopted_501_8_final.pdf
[2] AICPA Ethics Ruling 94, Indemnification Clause in Engagement Letters, Ethics Interpretation Section 191, Ethics Rulings on Independence, Integrity, and Objectivity
[3] For more information, see Tort Reform Issues in the Uniform Accountancy Act, available at: http://www.aicpa.org/download/uaa/Tort_Reform.PDF
[4] Under Ethics Interpretation Section 191, Ethics Rulings on Independence, Integrity, and Objectivity
Wednesday, December 17, 2008
Tuesday, December 16, 2008
10 Keys to Success
1. IDENTIFY and focus on the profile of your ideal client. 80/20 Rule says that eighty percent of your revenue is derived from the top twenty percent of your clients!
2. Move your professional OBJECTIVES to the highest value level. We’re willing to pay more for a UNIQUE PRODUCT than a “commodity.” We pay more for exceptional SERVICE than we do for unique products. We pay the most out of all of these for a unique EXPERIENCE.
3. Establish a VALUE-BASED practice for your clients. It is more important that VALUES are understood before ASSETS are valued.
4. Provide greater clarity, balance, focus, and therefore CONFIDENCE for your clients and their families. Confidence is one of the most important assets in any relationship.
5. Establish CREDIBILITY and a positive reputation with your clients and partners. This can be done through education and communication.
6. Use a professional COACH to catapult you to the next level of success and balance in your life. A coach will help you focus on your unique abilities, create value, and implement an effective time management system.
7. Determine which clients and opportunities to SEIZE and which ones to DELEGATE or leave behind. Work with clients that reward you, provide referrals, enhance your assets, and appreciate what you do for them.
8. Establish your priorities and BALANCE your life utilizing a color-coded 30-day calendar. Schedule personal rejuvenation days, at least ten “focus” days, and four to eight days for coordinating plans. (Our Outlook calendars are perfect for this!)
9. Find your NICHE and develop a unique system that sets you apart. Identify your market niche and harness your abilities to create the best results. “Get rich in your niche!”
10. Form strategic ALLIANCES with key professionals in the industry. Affiliate yourself with high-achievers and bird-doggers.
Wally Saucedo is a member of The Equity Alliance Matrix (TEAM) and personally trained by Douglas R Andrew, author if Missed Fortune, Missed Fortune 101, The Last Chance Millionaire. Contact us for a financial analysis.
2. Move your professional OBJECTIVES to the highest value level. We’re willing to pay more for a UNIQUE PRODUCT than a “commodity.” We pay more for exceptional SERVICE than we do for unique products. We pay the most out of all of these for a unique EXPERIENCE.
3. Establish a VALUE-BASED practice for your clients. It is more important that VALUES are understood before ASSETS are valued.
4. Provide greater clarity, balance, focus, and therefore CONFIDENCE for your clients and their families. Confidence is one of the most important assets in any relationship.
5. Establish CREDIBILITY and a positive reputation with your clients and partners. This can be done through education and communication.
6. Use a professional COACH to catapult you to the next level of success and balance in your life. A coach will help you focus on your unique abilities, create value, and implement an effective time management system.
7. Determine which clients and opportunities to SEIZE and which ones to DELEGATE or leave behind. Work with clients that reward you, provide referrals, enhance your assets, and appreciate what you do for them.
8. Establish your priorities and BALANCE your life utilizing a color-coded 30-day calendar. Schedule personal rejuvenation days, at least ten “focus” days, and four to eight days for coordinating plans. (Our Outlook calendars are perfect for this!)
9. Find your NICHE and develop a unique system that sets you apart. Identify your market niche and harness your abilities to create the best results. “Get rich in your niche!”
10. Form strategic ALLIANCES with key professionals in the industry. Affiliate yourself with high-achievers and bird-doggers.
Wally Saucedo is a member of The Equity Alliance Matrix (TEAM) and personally trained by Douglas R Andrew, author if Missed Fortune, Missed Fortune 101, The Last Chance Millionaire. Contact us for a financial analysis.
Monday, December 15, 2008
8 High-Risk Clients CPAs Should Avoid
Time after time, CAMICO claims specialists hear the same words when they first contact policyholders to discuss a new lawsuit: "I can't believe this client is suing me. They were always slow to pay, and I had so much trouble getting the information I needed from them. It was never worth the aggravation. I should have gotten rid of them years ago."
CAMICO has long recommended client screening as the first step in an effective loss control program. CPAs should communicate with predecessor accountants, client management, and third parties to obtain as much information as possible about the client.
Some warning signs include:
Clients who are not a good fit for the firm's expertise and resources.
Is the engagement within the firm's areas of expertise? Is the engagement risky? Are the rewards of the engagement worth the risk? If the firm accepts an engagement for which it is not professionally staffed or qualified, it runs the risk of disappointing the client, or a third-party, and exposing itself to litigation and ethics violations. Some CPAs make an annual habit of redefining and understanding the scope of their own practice, going as far as to write out a clear statement of what they can do and what they cannot do.
Clients who won't pay.
Does the client appropriately value CPA services and advice? Does the client pay bills on time? Is the client financially viable? What is the client's financial track record (e.g., bankruptcies, business failures)? The answers to these questions are critical, especially in avoiding fee collection problems and disputes. Much of the information can be obtained by: - interviewing the client and the client's key personnel, banker, attorney, predecessor accountants and auditors- running a credit check - examining the past three years of financial statements and tax returns, and the prior CPA's management letters.
Uncooperative clients.
Is the client reasonable and knowledgeable? Or is the client difficult and time-consuming? Clients who don't provide information on a timely basis, or who don't provide documents or information despite repeated requests, are problems.
Client with poor internal controls.
Obtain a good understanding of the client's commitment to appropriate accounting practices and to internal controls. If the client makes it easy for dishonest people to embezzle from them, the dishonest will embezzle from them. And the client will then blame CPA for not catching the embezzler.
Clients who are poor financial managers/bookkeepers.
Does the client meet deadlines? Keep good records? Are the business and accounting records adequate and in order, or disorganized? Are the financial statements and tax returns for the past three years consistent?
Clients who don't manage their own financial affairs well often experience problems for which they hold the CPA responsible. Poor bookkeeping can cause delays in obtaining information, causing the CPA's work product to be out of date and useless to the client. Tax returns may also be filed late, causing the client to incur interest or penalties. Poor bookkeeping causes the CPA to work harder to get a handle on financial information, and increased workloads lead to higher fees, which can lead to conflict.
Clients with a history of disputes/litigation.
Are the client's expectations of CPAs reasonable? Is the client of a litigious nature, judging from conversations with prior accountants and/or attorneys? Are they often unhappy with the results of an engagement, even though there was nothing wrong with the services performed? Unreasonable clients will sometimes believe that the CPA rendered substandard services, especially when they are unhappy with the results.
Clients with questionable integrity/reputation.
The client's reputation and integrity are paramount. When interviewing the client, the predecessor accountant, and third parties, look for indications of the client's integrity and reputation. What people do not say may be just as important as what they do say.
High debt/cash poor clients.
If they are not financially responsible, clients may blame the CPA when their finances take a downturn. Some clients will end up owing so much money to creditors and to the CPA that they believe asserting malpractice will help them avoid or reduce the amount they owe.
Much of the pertinent information can be obtained at the client interview and verified later through other interviews. Background investigations are recommended for all significant engagements.
In a CPA partnership or professional corporation, it is common practice for another partner or a client committee to review the client-screening information and to pass judgment on the acceptability of a new client.
CPA firms should evaluate all potential new clients and re-evaluate all current clients at least annually. This enables the firm to better monitor clients, consider any changes that might affect the professional relationship, and avoid situations that could escalate into crises.
CAMICO has long recommended client screening as the first step in an effective loss control program. CPAs should communicate with predecessor accountants, client management, and third parties to obtain as much information as possible about the client.
Some warning signs include:
Clients who are not a good fit for the firm's expertise and resources.
Is the engagement within the firm's areas of expertise? Is the engagement risky? Are the rewards of the engagement worth the risk? If the firm accepts an engagement for which it is not professionally staffed or qualified, it runs the risk of disappointing the client, or a third-party, and exposing itself to litigation and ethics violations. Some CPAs make an annual habit of redefining and understanding the scope of their own practice, going as far as to write out a clear statement of what they can do and what they cannot do.
Clients who won't pay.
Does the client appropriately value CPA services and advice? Does the client pay bills on time? Is the client financially viable? What is the client's financial track record (e.g., bankruptcies, business failures)? The answers to these questions are critical, especially in avoiding fee collection problems and disputes. Much of the information can be obtained by: - interviewing the client and the client's key personnel, banker, attorney, predecessor accountants and auditors- running a credit check - examining the past three years of financial statements and tax returns, and the prior CPA's management letters.
Uncooperative clients.
Is the client reasonable and knowledgeable? Or is the client difficult and time-consuming? Clients who don't provide information on a timely basis, or who don't provide documents or information despite repeated requests, are problems.
Client with poor internal controls.
Obtain a good understanding of the client's commitment to appropriate accounting practices and to internal controls. If the client makes it easy for dishonest people to embezzle from them, the dishonest will embezzle from them. And the client will then blame CPA for not catching the embezzler.
Clients who are poor financial managers/bookkeepers.
Does the client meet deadlines? Keep good records? Are the business and accounting records adequate and in order, or disorganized? Are the financial statements and tax returns for the past three years consistent?
Clients who don't manage their own financial affairs well often experience problems for which they hold the CPA responsible. Poor bookkeeping can cause delays in obtaining information, causing the CPA's work product to be out of date and useless to the client. Tax returns may also be filed late, causing the client to incur interest or penalties. Poor bookkeeping causes the CPA to work harder to get a handle on financial information, and increased workloads lead to higher fees, which can lead to conflict.
Clients with a history of disputes/litigation.
Are the client's expectations of CPAs reasonable? Is the client of a litigious nature, judging from conversations with prior accountants and/or attorneys? Are they often unhappy with the results of an engagement, even though there was nothing wrong with the services performed? Unreasonable clients will sometimes believe that the CPA rendered substandard services, especially when they are unhappy with the results.
Clients with questionable integrity/reputation.
The client's reputation and integrity are paramount. When interviewing the client, the predecessor accountant, and third parties, look for indications of the client's integrity and reputation. What people do not say may be just as important as what they do say.
High debt/cash poor clients.
If they are not financially responsible, clients may blame the CPA when their finances take a downturn. Some clients will end up owing so much money to creditors and to the CPA that they believe asserting malpractice will help them avoid or reduce the amount they owe.
Much of the pertinent information can be obtained at the client interview and verified later through other interviews. Background investigations are recommended for all significant engagements.
In a CPA partnership or professional corporation, it is common practice for another partner or a client committee to review the client-screening information and to pass judgment on the acceptability of a new client.
CPA firms should evaluate all potential new clients and re-evaluate all current clients at least annually. This enables the firm to better monitor clients, consider any changes that might affect the professional relationship, and avoid situations that could escalate into crises.
Do You Have a Big Target On Your Back?
Diane Kennedy's Loopholes Update
Hi Friend:
Choosing the right business structure used to be much easier. There were bad business structures, really bad business structure and good ones.
Now it’s more complicated. If you own real estate, financing is tough and new lending rules from Fannie Mae and Freddie Mac mean that you need a layered business structure system.
If you owned a business, asset protection was a concern. You needed to protect your personal assets from something that might go wrong with the business. You might have also recently discovered that you need to also protect your business from personal lawsuits, so you needed a layered business structure system as well.
And now, with economic uncertainty, you might have already discovered that your biggest risk isn’t even from outside your business, it is from within your business. You need a new solution for the business challenges of 2009 and beyond!
If you haven’t updated your business structures within the past year, you might as well put a big target on your back!
Three friends went into business together. They knew they had to protect their personal assets from possible risk of the business, and so formed an LLC (Limited Liability Company) to operate the business through. Two partners went one step further and held their 1/3 share inside two other LLCs. The third partner didn’t think there was any risk and held her 1/3 share in her own name.
Soon after the business started, one partner left. The ending was relatively amenable, and didn’t wind up in court. After that, the business grew and was profitable, but the partners’ personal relationship failed after a few years. This time, though, the ending wasn’t amenable and resulted in numerous lawsuits being filed.
The partner who held her interest in her own name was now at a serious disadvantage. Because she hadn’t contained her business risk within a LLC, the lawsuits named her personally. The other partner was safe, behind the liability shield his personal LLC provided. If he lost, he may lose his half-share of the business, but his personal asset were safe. But the other partner held her interest personally, meaning she had no such protection.
All of her personal assets were at risk, leaving her with no choice but to defend each lawsuit that was filed, and pay out thousands of dollars in legal fees. She eventually won, but it was a very expensive lesson.
The lesson? NONE of this had to happen. If she had held her interest inside an LLC or other protected business structure, and she had followed the steps she need to protect it, the lawsuits would have quickly gone away.
In 2009 and beyond, you must have a layered structure system if you want to have true asset protection. In today’s uncertain economic time you need to protect everything much more carefully.
If You Have a Limited Partnership or a Single Member LLC, You Are Probably Going to Get Audited This Year!
The Limited Partnership and Single Member LLC have become audit red flags in and of themselves. Avoid these at all costs! Ironically, the Limited Partnership is about the ONLY structure I used to use for my real estate investor clients. How times have changed! Oh, and if you do have a Single Member LLC, I’ll tell you one simple change you can make that will move you right out of the IRS target range. That’s all part of my new home study course Business Structures for 2009 & Beyond.
Tax laws are changing, and changing rapidly. It’s predicted that we’re going to see more tax law changes in 2009 than in any other year since World War II. We’re going to see more changes in 2009 The strategies that worked in the simpler times just a few years ago, simply don’t work anymore. That’s why it was so important to create this brand new information product – Business Structures for 2009 & Beyond.
In this informative audio program, you’ll learn:
Section One:
Introduction to Business Structures: Why what you don’t know can hurt you!
Start here to learn about the changing environment for business structures in the financing world, for tax planning and the need to beef up your asset protection.
ALERT!! Did you know that if you violate the new anti-Identity Theft regulations and accidentally give out a customer’s name and address, you could personally face a $50,000 fine? Protect your family. Protect what you’ve worked so hard to build. Get the right Business Structures for 2009 & Beyond!
Learn the new “bad” business structures and how having the wrong structure can guarantee an IRS audit.
Section Two:
Why You Must Control an LLC Today
The Limited Liability Company is the chameleon of the business world. What is it? Well, what would you like it to be? Learn how everyone with any assets needs at least one LLC, and even better, learn how you can form them cheaper than you think.
3 Strategies to Pay Less Tax with an LLC
1 Proven Method to Bullet Proof Your Assets
Section 3:
Use the Best of an LLC, S Corp and C Corp in your Tax Plan to Combine Asset Protection With Tax Savings
As your business and assets grow, you will want to add to your stable of structures. Added at the right time, for example C Corporation taxation can immediately cut your tax bill $10,000 - $100,000 per year. And, even better, you don’t have to form a C Corporation to do it!
3 Secrets to Use the Best of Business Tax Law Every Time
Control When You Pay Your Taxes
The One Secret I Use to Always Save My Clients Tax Money
Section 4:
Select the State In Which You Do Business To Dramatically Reduce Your Taxes
States are broke and there is one thing they’re all going to do to get money: Find a way to bring you into their state. Learn what states to avoid at all costs and how one simple misstep could cause you years of state tax agony.
Critical Steps to Making Sure You Pay the Right State
3 Strategies to LEGALLY Avoiding Your Home State Tax With a Business
The 3 State Taxes You Need to Run From
Section 5:
Put Your Real Estate in the Best Business Structures for 2009 & Beyond
Or better yet, “How One Client Saved Almost $3,000 in State Fees Each Year By Making One Easy Change.”
Real estate structures are tricky these days. You need maximum flexibility for financing, plus you need stronger-then-ever asset protection.
How to Avoid the Limited Partnership Audit Trap
How to Navigate the Tricky Fannie Mae & Freddie Mac Requirements for Refinancing by Using the Right Structures
Advanced Techniques with the Trust Sandwich to Limit Costs in All States
Section 6:
Advanced State Tax Strategies
In this fun interactive section recorded live at one of our popular events, you’ll hear real life case studies of what it takes to pay the least amount of state tax.
How Gross Margin Tax Can Ruin Everything
Look Out If You Have Workers In This State
Even Driving Regularly in These Two States Could Make You Subject to Tax
And of course, we’ll give you the step-by-step strategies to make sure these problems don’t happen to you!
Section 7:
Avoid These C Corporation Tax Traps
This may very well turn into the most important information you learn in 2009 and beyond! Personal income tax rates are on the rise and C Corporate rates are lowering. If you have a business, you’ll probably want a C Corporation, or better yet, a layered business structure with a C Corporation.
Know the traps and the strategies to avoid them:
3 Signs that Double Taxation Could Become an Issue for You
Strategies to Avoid Controlled Group Issue, and Why You Want To
2 Systems to Flunk the Personal Service Corp Test
How to Use Corporate Tax Law to Create Passive Income
Section 8:
What You Need to Do Next
None of this matters, if you don’t know what to do next! That’s what this valuable final section does – tells you, step by step, what to do so you can move forward with your own Business Structures for 2009 & Beyond!
In just a second, I’ll tell you the steps you need to follow to make sure your plan is safe and secure by following the Business Structures Resource Guide.
First, though, I want to tell you about the 3 Options you have when you sign up for the Business Structures for 2009 & Beyond Complete Home Study Course.
Download Immediately $ 247
Physical Product (CDs & CD-ROM) 297
Physical Product PLUS Download 297
Business Structures for 2009 & Beyond Also Comes with a Handy Stand-Alone Resource Guide
PLUS The Business Structures for 2009 & Beyond Home Study Course comes with a stand-alone Resource Guide. This reference guide will sit right next to your computer, quite possibly the most value business resource you have. As your business grows, you’ll know the fundamental of business structures and even more importantly, how to select the right one at the right time.
Just look at all the information you’ll get in this 100+ page Resource Guide.
Part I: Foundation for Business Structure Planning
The 3 Goals to Plan Around
Risky Business Structure Choices (Sole Proprietorships, General
Partnerships and Living Trusts
Safe Business Structure Choices
The Asset Protectors: Limited Partnerships and Limited Liability
Companies
The Passive Income Advantage
The Special Asset Protection Advantage
Charging Orders
Why You can’t Protect a Business from Itself
The Basic Elements of Limited Partnerships and Limited Liability Companies
How the Asset Protectors are Taxed and Distribute Profits
The Business Operators: C Corporations and S Corporations
The Basic Elements of A Corporation: Shareholders, Directors and Officers
How the Business Operators are Taxed and Distribute Profits
S Corporation or C Corporation: Which is Better?
10 Questions to Help Make the C versus S Corporation Decision
What Structure is Best for You?
PART II: Business Structure Planning for 2009 & Beyond
Today’s Business Structure Menu
The Decline of the Limited Partnership
The Danger of the Single-Member LLC
Are SMLLCs Safe?
The Well-Placed C Corporation
The LLC Taxed as a C Corporation
The LLC Taxed as an S Corporation
How to Switch from an S Corporation to an LLC-S
One More Argument in Favor of the LLC-C and LLC-S
The Series LLC
The Trust Sandwich
Upgrading the Trust Sandwich with a Series LLC
Real Life Business Structure Strategy Examples
State-by-State Guide to Charging Order Provisions
The Business Structures for 2009 & Beyond Home Study Guide, complete with it’s own Handy Stand-Alone Resource Guide can save you THOUSANDS of dollars in legal fees. You’ll find other information products priced at $799, $999 and $1,499 that don’t have all the cutting edge strategies that are packed into this product. That’s why it’s a steal at just $297!
For a limited time, though, you can get this and much more!
#BONUS #1: The Trust Sandwich: A New Way to Protect Assets and Save Money – A $99 Value
In May 2008, Freddie Mac changed lending rules and rocked the financial world forever. The Trust Sandwich was born out of those turbulent times, designed to protect assets, ensure you pay the least amount of taxes possible and give you the most flexibility possible.
Learn how to put the power of a Trust Sandwich to work for you to:
Protect your assets
Save state filing fees
Save transfer fees
Maintain maximum flexibility for new strict financing requirements
Plan your estate
The Trust Sandwich: A New Strategy to Protect Assets and Save Money is an 90-minute audio program led by Megan Hughes, co-creator of the Trust Sandwich. You also get a 20+ page Special Report packed with information and practical tax-slashing strategies.
#BONUS #2! We’ll also include my brand new audio recording “How To Survive the Government’s New Plan For Raising More Social Security Money” – A $49 Value
This is proof that the government wants you to create passive income. Done right, you can avoid all state income tax and greatly reduce your federal tax rate. Done wrong, and you’ll pay the same old way – right through your nose!
#BONUS #3! $100 Coupon You Can Use Towards the Formation of Any New Business Structure Set Up By Megan Hughes’ company, Business First Formations, Inc.
When you ACT NOW you get all of these bonuses – valued at $248 for FREE! In fact, if you ACT WITHIN THE NEXT 10 DAYS, you can own all of these items:
Business Structures for 2009 & Beyond
The Trust Sandwich: A New Way to Protect Assets and Save Money
How to Survive the Government’s New Plan for Raising More Social Security Money
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TOTAL VALUE OF ALL OF THESE PACKAGES IS JUST $547
But you aren’t going to have to pay that, FOR 10 DAYS ONLY – Your Investment is ONLY $249!
There are three ways to get started today with the Business Structures for 2009 & Beyond Complete Home Study Course.
Download Immediately $ 249
Physical Product (CDs & CD-ROM) 299
Physical Product PLUS Download 299
Please don’t wait. You must act now to protect your assets and build wealth safely. Tax changes are coming, get ready now with Business Structures for 2009 & Beyond!
Warmly,
Diane
P.S. A regular S Corporation or C Corporation is no longer enough. I just received this email from one of our TaxLoopholes Community Members:
My son had an apartment business once in Billings, Montana, one apartment house and several other rentals. One of the landlords in their association tried to charge a deposit for a "companion dog." Not a seeing eye or anything like that. A "companion dog." He always charged a deposit for damages from dogs and did not know that it is against a federal law to charge for a "companion dog." And why should it be anyway? Why should a landlord have to bear expense of damage from a "companion dog?" The landlord was sued and lost to the tune of $90,000.
What did they do? They sold everything and moved to Chile and Argentina!
If you want to do business and build wealth in the US, you must use the tax and business structures that protect your wealth as you grow it.
P.P.S. Please remember this special offer is GONE IN 10 DAYS. Please act now to receive the discounted price PLUS bonuses totaling $248 FREE!
You have received this notice because you may have recently become a member of one of our websites or simply signed up to receive Diane Kennedy's Loopholes Update. If you no longer wish to receive our e-newsletter, or you need to update your current email address, please email us at info@dianekennedycpa.com with your request.
To ensure compliance with requirements imposed by the IRS, we inform you that any US federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and it cannot be used for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein. If you are not the original addressee of this communication, you should seek advice based on your particular circumstances from an independent advisor.
This message (including any attachments) contains confidential information intended for a specific individual and purpose, and is protected by law. If you are not the intended recipient, you should delete this message. Any disclosure, copying, or distribution of this message, or the taking of any action based on it, is strictly prohibited.
TaxLoopholes, LLC / PMB PMB 608 / 5350 W Bell Road C-122 / Glendale AZ 85308
Hi Friend:
Choosing the right business structure used to be much easier. There were bad business structures, really bad business structure and good ones.
Now it’s more complicated. If you own real estate, financing is tough and new lending rules from Fannie Mae and Freddie Mac mean that you need a layered business structure system.
If you owned a business, asset protection was a concern. You needed to protect your personal assets from something that might go wrong with the business. You might have also recently discovered that you need to also protect your business from personal lawsuits, so you needed a layered business structure system as well.
And now, with economic uncertainty, you might have already discovered that your biggest risk isn’t even from outside your business, it is from within your business. You need a new solution for the business challenges of 2009 and beyond!
If you haven’t updated your business structures within the past year, you might as well put a big target on your back!
Three friends went into business together. They knew they had to protect their personal assets from possible risk of the business, and so formed an LLC (Limited Liability Company) to operate the business through. Two partners went one step further and held their 1/3 share inside two other LLCs. The third partner didn’t think there was any risk and held her 1/3 share in her own name.
Soon after the business started, one partner left. The ending was relatively amenable, and didn’t wind up in court. After that, the business grew and was profitable, but the partners’ personal relationship failed after a few years. This time, though, the ending wasn’t amenable and resulted in numerous lawsuits being filed.
The partner who held her interest in her own name was now at a serious disadvantage. Because she hadn’t contained her business risk within a LLC, the lawsuits named her personally. The other partner was safe, behind the liability shield his personal LLC provided. If he lost, he may lose his half-share of the business, but his personal asset were safe. But the other partner held her interest personally, meaning she had no such protection.
All of her personal assets were at risk, leaving her with no choice but to defend each lawsuit that was filed, and pay out thousands of dollars in legal fees. She eventually won, but it was a very expensive lesson.
The lesson? NONE of this had to happen. If she had held her interest inside an LLC or other protected business structure, and she had followed the steps she need to protect it, the lawsuits would have quickly gone away.
In 2009 and beyond, you must have a layered structure system if you want to have true asset protection. In today’s uncertain economic time you need to protect everything much more carefully.
If You Have a Limited Partnership or a Single Member LLC, You Are Probably Going to Get Audited This Year!
The Limited Partnership and Single Member LLC have become audit red flags in and of themselves. Avoid these at all costs! Ironically, the Limited Partnership is about the ONLY structure I used to use for my real estate investor clients. How times have changed! Oh, and if you do have a Single Member LLC, I’ll tell you one simple change you can make that will move you right out of the IRS target range. That’s all part of my new home study course Business Structures for 2009 & Beyond.
Tax laws are changing, and changing rapidly. It’s predicted that we’re going to see more tax law changes in 2009 than in any other year since World War II. We’re going to see more changes in 2009 The strategies that worked in the simpler times just a few years ago, simply don’t work anymore. That’s why it was so important to create this brand new information product – Business Structures for 2009 & Beyond.
In this informative audio program, you’ll learn:
Section One:
Introduction to Business Structures: Why what you don’t know can hurt you!
Start here to learn about the changing environment for business structures in the financing world, for tax planning and the need to beef up your asset protection.
ALERT!! Did you know that if you violate the new anti-Identity Theft regulations and accidentally give out a customer’s name and address, you could personally face a $50,000 fine? Protect your family. Protect what you’ve worked so hard to build. Get the right Business Structures for 2009 & Beyond!
Learn the new “bad” business structures and how having the wrong structure can guarantee an IRS audit.
Section Two:
Why You Must Control an LLC Today
The Limited Liability Company is the chameleon of the business world. What is it? Well, what would you like it to be? Learn how everyone with any assets needs at least one LLC, and even better, learn how you can form them cheaper than you think.
3 Strategies to Pay Less Tax with an LLC
1 Proven Method to Bullet Proof Your Assets
Section 3:
Use the Best of an LLC, S Corp and C Corp in your Tax Plan to Combine Asset Protection With Tax Savings
As your business and assets grow, you will want to add to your stable of structures. Added at the right time, for example C Corporation taxation can immediately cut your tax bill $10,000 - $100,000 per year. And, even better, you don’t have to form a C Corporation to do it!
3 Secrets to Use the Best of Business Tax Law Every Time
Control When You Pay Your Taxes
The One Secret I Use to Always Save My Clients Tax Money
Section 4:
Select the State In Which You Do Business To Dramatically Reduce Your Taxes
States are broke and there is one thing they’re all going to do to get money: Find a way to bring you into their state. Learn what states to avoid at all costs and how one simple misstep could cause you years of state tax agony.
Critical Steps to Making Sure You Pay the Right State
3 Strategies to LEGALLY Avoiding Your Home State Tax With a Business
The 3 State Taxes You Need to Run From
Section 5:
Put Your Real Estate in the Best Business Structures for 2009 & Beyond
Or better yet, “How One Client Saved Almost $3,000 in State Fees Each Year By Making One Easy Change.”
Real estate structures are tricky these days. You need maximum flexibility for financing, plus you need stronger-then-ever asset protection.
How to Avoid the Limited Partnership Audit Trap
How to Navigate the Tricky Fannie Mae & Freddie Mac Requirements for Refinancing by Using the Right Structures
Advanced Techniques with the Trust Sandwich to Limit Costs in All States
Section 6:
Advanced State Tax Strategies
In this fun interactive section recorded live at one of our popular events, you’ll hear real life case studies of what it takes to pay the least amount of state tax.
How Gross Margin Tax Can Ruin Everything
Look Out If You Have Workers In This State
Even Driving Regularly in These Two States Could Make You Subject to Tax
And of course, we’ll give you the step-by-step strategies to make sure these problems don’t happen to you!
Section 7:
Avoid These C Corporation Tax Traps
This may very well turn into the most important information you learn in 2009 and beyond! Personal income tax rates are on the rise and C Corporate rates are lowering. If you have a business, you’ll probably want a C Corporation, or better yet, a layered business structure with a C Corporation.
Know the traps and the strategies to avoid them:
3 Signs that Double Taxation Could Become an Issue for You
Strategies to Avoid Controlled Group Issue, and Why You Want To
2 Systems to Flunk the Personal Service Corp Test
How to Use Corporate Tax Law to Create Passive Income
Section 8:
What You Need to Do Next
None of this matters, if you don’t know what to do next! That’s what this valuable final section does – tells you, step by step, what to do so you can move forward with your own Business Structures for 2009 & Beyond!
In just a second, I’ll tell you the steps you need to follow to make sure your plan is safe and secure by following the Business Structures Resource Guide.
First, though, I want to tell you about the 3 Options you have when you sign up for the Business Structures for 2009 & Beyond Complete Home Study Course.
Download Immediately $ 247
Physical Product (CDs & CD-ROM) 297
Physical Product PLUS Download 297
Business Structures for 2009 & Beyond Also Comes with a Handy Stand-Alone Resource Guide
PLUS The Business Structures for 2009 & Beyond Home Study Course comes with a stand-alone Resource Guide. This reference guide will sit right next to your computer, quite possibly the most value business resource you have. As your business grows, you’ll know the fundamental of business structures and even more importantly, how to select the right one at the right time.
Just look at all the information you’ll get in this 100+ page Resource Guide.
Part I: Foundation for Business Structure Planning
The 3 Goals to Plan Around
Risky Business Structure Choices (Sole Proprietorships, General
Partnerships and Living Trusts
Safe Business Structure Choices
The Asset Protectors: Limited Partnerships and Limited Liability
Companies
The Passive Income Advantage
The Special Asset Protection Advantage
Charging Orders
Why You can’t Protect a Business from Itself
The Basic Elements of Limited Partnerships and Limited Liability Companies
How the Asset Protectors are Taxed and Distribute Profits
The Business Operators: C Corporations and S Corporations
The Basic Elements of A Corporation: Shareholders, Directors and Officers
How the Business Operators are Taxed and Distribute Profits
S Corporation or C Corporation: Which is Better?
10 Questions to Help Make the C versus S Corporation Decision
What Structure is Best for You?
PART II: Business Structure Planning for 2009 & Beyond
Today’s Business Structure Menu
The Decline of the Limited Partnership
The Danger of the Single-Member LLC
Are SMLLCs Safe?
The Well-Placed C Corporation
The LLC Taxed as a C Corporation
The LLC Taxed as an S Corporation
How to Switch from an S Corporation to an LLC-S
One More Argument in Favor of the LLC-C and LLC-S
The Series LLC
The Trust Sandwich
Upgrading the Trust Sandwich with a Series LLC
Real Life Business Structure Strategy Examples
State-by-State Guide to Charging Order Provisions
The Business Structures for 2009 & Beyond Home Study Guide, complete with it’s own Handy Stand-Alone Resource Guide can save you THOUSANDS of dollars in legal fees. You’ll find other information products priced at $799, $999 and $1,499 that don’t have all the cutting edge strategies that are packed into this product. That’s why it’s a steal at just $297!
For a limited time, though, you can get this and much more!
#BONUS #1: The Trust Sandwich: A New Way to Protect Assets and Save Money – A $99 Value
In May 2008, Freddie Mac changed lending rules and rocked the financial world forever. The Trust Sandwich was born out of those turbulent times, designed to protect assets, ensure you pay the least amount of taxes possible and give you the most flexibility possible.
Learn how to put the power of a Trust Sandwich to work for you to:
Protect your assets
Save state filing fees
Save transfer fees
Maintain maximum flexibility for new strict financing requirements
Plan your estate
The Trust Sandwich: A New Strategy to Protect Assets and Save Money is an 90-minute audio program led by Megan Hughes, co-creator of the Trust Sandwich. You also get a 20+ page Special Report packed with information and practical tax-slashing strategies.
#BONUS #2! We’ll also include my brand new audio recording “How To Survive the Government’s New Plan For Raising More Social Security Money” – A $49 Value
This is proof that the government wants you to create passive income. Done right, you can avoid all state income tax and greatly reduce your federal tax rate. Done wrong, and you’ll pay the same old way – right through your nose!
#BONUS #3! $100 Coupon You Can Use Towards the Formation of Any New Business Structure Set Up By Megan Hughes’ company, Business First Formations, Inc.
When you ACT NOW you get all of these bonuses – valued at $248 for FREE! In fact, if you ACT WITHIN THE NEXT 10 DAYS, you can own all of these items:
Business Structures for 2009 & Beyond
The Trust Sandwich: A New Way to Protect Assets and Save Money
How to Survive the Government’s New Plan for Raising More Social Security Money
$100 Coupon Towards any New Business Structure Set up by Business First Formations, Inc.
TOTAL VALUE OF ALL OF THESE PACKAGES IS JUST $547
But you aren’t going to have to pay that, FOR 10 DAYS ONLY – Your Investment is ONLY $249!
There are three ways to get started today with the Business Structures for 2009 & Beyond Complete Home Study Course.
Download Immediately $ 249
Physical Product (CDs & CD-ROM) 299
Physical Product PLUS Download 299
Please don’t wait. You must act now to protect your assets and build wealth safely. Tax changes are coming, get ready now with Business Structures for 2009 & Beyond!
Warmly,
Diane
P.S. A regular S Corporation or C Corporation is no longer enough. I just received this email from one of our TaxLoopholes Community Members:
My son had an apartment business once in Billings, Montana, one apartment house and several other rentals. One of the landlords in their association tried to charge a deposit for a "companion dog." Not a seeing eye or anything like that. A "companion dog." He always charged a deposit for damages from dogs and did not know that it is against a federal law to charge for a "companion dog." And why should it be anyway? Why should a landlord have to bear expense of damage from a "companion dog?" The landlord was sued and lost to the tune of $90,000.
What did they do? They sold everything and moved to Chile and Argentina!
If you want to do business and build wealth in the US, you must use the tax and business structures that protect your wealth as you grow it.
P.P.S. Please remember this special offer is GONE IN 10 DAYS. Please act now to receive the discounted price PLUS bonuses totaling $248 FREE!
You have received this notice because you may have recently become a member of one of our websites or simply signed up to receive Diane Kennedy's Loopholes Update. If you no longer wish to receive our e-newsletter, or you need to update your current email address, please email us at info@dianekennedycpa.com with your request.
To ensure compliance with requirements imposed by the IRS, we inform you that any US federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and it cannot be used for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein. If you are not the original addressee of this communication, you should seek advice based on your particular circumstances from an independent advisor.
This message (including any attachments) contains confidential information intended for a specific individual and purpose, and is protected by law. If you are not the intended recipient, you should delete this message. Any disclosure, copying, or distribution of this message, or the taking of any action based on it, is strictly prohibited.
TaxLoopholes, LLC / PMB PMB 608 / 5350 W Bell Road C-122 / Glendale AZ 85308
Diane Kennedy's Loopholes Update
Do you really want to start over again from nothing?
In the past week, I’ve talked to 3 people who have to start over again in real life. In each case, it wasn’t because the real estate market had collapsed. But, one did lose his home. And it wasn’t because the stock market had collapsed, but they did each see a shrinking retirement fund. And it wasn’t because they lost their business, at least not yet.
They lost everything because they didn’t make a couple of important changes to their business structures. The plans were outdated, and in today’s economic climate, that can be deadly!
Apartment Building Owners Discover Insurance Isn’t Enough
A new client of mine told me his story of why he ALWAYS has a business structure for his real estate.
This happened just as he was building his real estate wealth. He had really extended himself financially and had three apartment buildings. Paying to set up an LLC was just too much and besides, he figured, wasn’t insurance all you needed?
One day he was at one of his apartment buildings, meeting with the manager, when an alert came on over the radio. A suspected murderer had escaped custody near the building.
Just then, a woman came running up to the apartment manager. She’d just seen the suspect in the hallway. They called the police.
As the police approached the area where the man had been spotted, another tenant came to him. He’d seen the man too. Not only that, he’d ridden the elevator up with him and had seen what apartment he’d gone into.
The owner, manager, witness and police all rode the elevator up to the apartment, then cautiously approached. The police, guns drawn, knocked on the door. No answer. They knocked again and they heard a baby cry. Suddenly the baby stopped crying in mid-scream. Silence.
The police then weighed their options. A suspected murderer might be in that apartment. There was clearly someone in there and that someone had just quickly stopped a baby from crying. If they went in with guns blazing, there could quickly be a hostage situation.
My client then said, “Wait! I have a key.”
He handed the key to the police who used it to open the door and rush inside.
It turns out that the man who entered was not the suspect. And it also turns out that the single mom who rented the apartment was fine, as was her baby.
But that was just the beginning of the landlord’s problems. The lady sued him for unlawfully entering his house.
Fine, he thought. He had insurance. And the insurance company were quick on the spot with their attorneys. The tenant had her attorney. The insurance company had their attorneys. And there was one thing they all agreed on. It was the landlord’s fault. Oh, and his insurance company didn’t cover his action due to some breach or another.
So the owner had to get his own set of attorneys. And, after one week’s worth of depositions with 3 attorneys he paid for at $300 per hour or so, they finally all settled.
And that’s why my new client would NEVER own property again without using a business structure.
Lesson: Make sure you’re protecting your assets. You can’t count on someone else to watch out for you. It’s up to you!
Woman Loses Out on Refinance Dollars Due to Rule Change
The news is full of upside down houses. (No, not from a tornado, but from the storm of the housing downturn.) But the reality is that isn’t true in every part of the country. In fact, I have clients in the Midwest who are still steaming ahead, making money. Values are increasing. And there are still loans available. There are even loans available, just like in the good old days, that allow you to pull equity out.
And that was the strategy for Ann. She bought houses, fixed them up, refinanced them to pull out her costs and then sold them on Rent to Own programs. Everything was full steam ahead until she ran afoul of the new Freddie Mac lending rules.
She had done everything right – working through a business structure to protect her assets. The problem was that she was working in the WRONG business structure and suddenly, without notice, that meant she couldn’t refinance her properties. Her business stopped dead in its tracks.
That’s when the Trust Sandwich™ was born. It’s a way to protect your property plus give you the flexibility to refinance.
The Trust Sandwich™ is just one of the new Business Structures for 2009 and Beyond that we’re putting our clients in.
Doctor Almost Loses Everything in First Strike, Looks Like Second Strike Will Take Him Out
One more story. I wish more of these were happy stories! But lately it seems like everybody I know in business is getting sued, or has been threatened with a suit. It doesn’t matter if there is any real reason behind it. Anybody can sue anyone at anytime for anything. Unfortunately, that’s one of the big downsides of doing business in the US.
Chances are you’ll win in the end, but can your business, family and emotional health handle it while you get to the end?
I just met a new client this past week who had almost gotten wiped out financially when his 15 year old son was in a car wreck that was his fault. The doctor had been careful to have a corporation for his practice. The problem was that the corporation didn’t protect the business against personal threat.
The second whammy happened when the IRS came after him. The lawsuit wiped out the money, but not the IRS obligations.
LESSON: In 2009 and beyond there is one key phrase you need to remember - Protect as you build.
In the next few days I’m going to be announcing a brand new educational product entitled “Business Structures for 2009 and Beyond”. We’re highlighting advanced strategies using LLCs, Series LLCs and Trust Sandwiches. PLUS there is a bonus section with Megan Hughes on the Trust Sandwich and a special bonus that I’ll tell you about later this week.
Times have changed. Laws have changed. People are much more willing to sue you at the drop of a hat. And, tax laws are about to change, a lot. You need to be protected and flexible.
Warmly,
Diane Kennedy
P.S. Please watch your email for the announcement of the brand new educational product with a very special limited offer.
P.P.S. If you’re growing your wealth, protect it. It’s never been more important.
In the past week, I’ve talked to 3 people who have to start over again in real life. In each case, it wasn’t because the real estate market had collapsed. But, one did lose his home. And it wasn’t because the stock market had collapsed, but they did each see a shrinking retirement fund. And it wasn’t because they lost their business, at least not yet.
They lost everything because they didn’t make a couple of important changes to their business structures. The plans were outdated, and in today’s economic climate, that can be deadly!
Apartment Building Owners Discover Insurance Isn’t Enough
A new client of mine told me his story of why he ALWAYS has a business structure for his real estate.
This happened just as he was building his real estate wealth. He had really extended himself financially and had three apartment buildings. Paying to set up an LLC was just too much and besides, he figured, wasn’t insurance all you needed?
One day he was at one of his apartment buildings, meeting with the manager, when an alert came on over the radio. A suspected murderer had escaped custody near the building.
Just then, a woman came running up to the apartment manager. She’d just seen the suspect in the hallway. They called the police.
As the police approached the area where the man had been spotted, another tenant came to him. He’d seen the man too. Not only that, he’d ridden the elevator up with him and had seen what apartment he’d gone into.
The owner, manager, witness and police all rode the elevator up to the apartment, then cautiously approached. The police, guns drawn, knocked on the door. No answer. They knocked again and they heard a baby cry. Suddenly the baby stopped crying in mid-scream. Silence.
The police then weighed their options. A suspected murderer might be in that apartment. There was clearly someone in there and that someone had just quickly stopped a baby from crying. If they went in with guns blazing, there could quickly be a hostage situation.
My client then said, “Wait! I have a key.”
He handed the key to the police who used it to open the door and rush inside.
It turns out that the man who entered was not the suspect. And it also turns out that the single mom who rented the apartment was fine, as was her baby.
But that was just the beginning of the landlord’s problems. The lady sued him for unlawfully entering his house.
Fine, he thought. He had insurance. And the insurance company were quick on the spot with their attorneys. The tenant had her attorney. The insurance company had their attorneys. And there was one thing they all agreed on. It was the landlord’s fault. Oh, and his insurance company didn’t cover his action due to some breach or another.
So the owner had to get his own set of attorneys. And, after one week’s worth of depositions with 3 attorneys he paid for at $300 per hour or so, they finally all settled.
And that’s why my new client would NEVER own property again without using a business structure.
Lesson: Make sure you’re protecting your assets. You can’t count on someone else to watch out for you. It’s up to you!
Woman Loses Out on Refinance Dollars Due to Rule Change
The news is full of upside down houses. (No, not from a tornado, but from the storm of the housing downturn.) But the reality is that isn’t true in every part of the country. In fact, I have clients in the Midwest who are still steaming ahead, making money. Values are increasing. And there are still loans available. There are even loans available, just like in the good old days, that allow you to pull equity out.
And that was the strategy for Ann. She bought houses, fixed them up, refinanced them to pull out her costs and then sold them on Rent to Own programs. Everything was full steam ahead until she ran afoul of the new Freddie Mac lending rules.
She had done everything right – working through a business structure to protect her assets. The problem was that she was working in the WRONG business structure and suddenly, without notice, that meant she couldn’t refinance her properties. Her business stopped dead in its tracks.
That’s when the Trust Sandwich™ was born. It’s a way to protect your property plus give you the flexibility to refinance.
The Trust Sandwich™ is just one of the new Business Structures for 2009 and Beyond that we’re putting our clients in.
Doctor Almost Loses Everything in First Strike, Looks Like Second Strike Will Take Him Out
One more story. I wish more of these were happy stories! But lately it seems like everybody I know in business is getting sued, or has been threatened with a suit. It doesn’t matter if there is any real reason behind it. Anybody can sue anyone at anytime for anything. Unfortunately, that’s one of the big downsides of doing business in the US.
Chances are you’ll win in the end, but can your business, family and emotional health handle it while you get to the end?
I just met a new client this past week who had almost gotten wiped out financially when his 15 year old son was in a car wreck that was his fault. The doctor had been careful to have a corporation for his practice. The problem was that the corporation didn’t protect the business against personal threat.
The second whammy happened when the IRS came after him. The lawsuit wiped out the money, but not the IRS obligations.
LESSON: In 2009 and beyond there is one key phrase you need to remember - Protect as you build.
In the next few days I’m going to be announcing a brand new educational product entitled “Business Structures for 2009 and Beyond”. We’re highlighting advanced strategies using LLCs, Series LLCs and Trust Sandwiches. PLUS there is a bonus section with Megan Hughes on the Trust Sandwich and a special bonus that I’ll tell you about later this week.
Times have changed. Laws have changed. People are much more willing to sue you at the drop of a hat. And, tax laws are about to change, a lot. You need to be protected and flexible.
Warmly,
Diane Kennedy
P.S. Please watch your email for the announcement of the brand new educational product with a very special limited offer.
P.P.S. If you’re growing your wealth, protect it. It’s never been more important.
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