Do you know how to stay rich? As a business law attorney, I often tell clients that my goal is to get them rich and KEEP them rich! If you’ve got the motivation to grind and want to create a successful business, then you first need to know how to protect it from attorneys like me.
I know I may not look like it, but I’m that cold-blooded business attorney that will tear a business apart to get my clients paid. Because of that knowledge, I’ve saved my clients hundreds of millions of dollars over the years. If you don’t pay close attention, then you’ll get to see someone like me chopping your childhood dream into pieces in Court.
Cover Your Assets to Stay Rich
If you already own, or are preparing to build, your own business, then you absolutely MUST protect yourself from the liabilities of your company to stay rich. Otherwise, you may end up losing your boats, guns, RVs, and other toys in the event that an employee of your business makes a mistake.
Under Texas law, you can organize your business structure in a manner that protects you personally from the judgments and debts of your company. Some of these structures are: Corporations (Inc.), Limited Partnerships (Ltd.), and Limited Liability Companies (LLC).
Selecting a business structure depends on your Management plan, long-term goals, investment options, and desired tax methods. Personally, I prefer paying fewer taxes, but to each their own.
How Bad Could It Be?
Let’s pretend for a moment that you’re considering opening up your own coffee shop, but you don’t want to stay rich when you make it big. You enter into a 3-year lease for your storefront, you negotiate a contract for a steady supply of coffee beans, and you lease a billboard for advertisement.
Since you didn’t want to waste time with limiting your liabilities, you decided to just start ordering everything with personal checks, signing leases in your name, and entering into contracts as an individual.
Unfortunately, another world-wide pandemic hits, which essentially closes your doors. Because business isn’t doing so hot, after a few months you have to close up your shop. After closing the doors, your business mail starts showing up at your house. All these creditors are demanding that you personally pay for the company’s debts since on paper, it just looks like you’re an eccentric individual with a serious coffee addiction.
What Else Could You Do?
Let’s go back and imagine that before you started signing your life away, you organized as a Limited Liability Company (LLC). Then, instead of signing your own name on all of those leases and contracts, you signed your company’s name as the responsible party.
Now fast forward to you closing your doors; it’s like the business was the one that entered into all of those obligations instead of you. When the creditors come calling, they come looking to liquidate the company’s assets and not your personal assets.
The creditors get your business’s coffee maker while your boats, timeshare in Maui, guns, and fun toys remain safe since they aren’t part of your business. You get to stay rich.
How much does it cost?
The Filing Fees for the Texas Secretary of State are around $300.00, depending on the type of entity. However, this doesn’t cover the drafting of the Corporate Bylaws or Company Operating Agreement. This is one of the most important steps! This is the instruction manual on how your business will function and will be one of the first things that an attorney like me asks for if you find yourself in litigation.
When you’re interviewing attorneys to help you form your business, ask them if the cost includes the Bylaws or Operating Agreement. The costs vary from attorney to attorney, as well as between locations. The beauty though is that an attorney can help you form your business from anywhere in Texas. In my experience, drafting your Operating Agreement or Corporate Bylaws typically aren’t expensive.
I refuse to simply help business owners form their business without understanding how to operate it correctly because that would be like tossing them the keys to a Ferrari without making sure they know how to drive.
So, call your Business Law Attorney today to make sure that they’re helping you to protect your personal assets from the liabilities of your business so you can stay rich.
–Authored by Carrie A. Harris, Esq.,
Matthew Harris Law, PLLC – Business Law Division
1001 Main Street, Suite 200, Lubbock, Texas, 79401-3309
Tel: (806) 702-4852 | Fax: (800) 985-9479