Introduction: In the world of business, the formation and governance of corporations play a significant role in ensuring stability and growth. A crucial aspect of corporate governance is the establishment and adherence to bylaws. This blog post will provide an overview of bylaws in corporations, highlighting their importance, components, and the process of creating and amending them. As a business formation law firm, Bagla Law is committed to helping you understand the intricacies of corporate bylaws to ensure the success and compliance of your corporation. What are Bylaws? Bylaws are a set of internal rules and regulations that govern the operation of a corporation. They serve as a blueprint for the corporation’s management structure, decision-making processes, and policies. Bylaws are essential to maintain order, prevent conflicts, and ensure smooth functioning within the organization. They provide guidance to the board of directors, officers, and shareholders on various matters, including meetings, voting, and the delegation of authority. The Importance of Bylaws Legal Compliance: Bylaws are legally required for corporations in most jurisdictions. They help establish the corporation’s legitimacy and demonstrate compliance with state and federal laws. Structure and Organization: Bylaws provide a framework for the corporation’s management structure, outlining the roles and responsibilities of directors, officers, and shareholders. Conflict Resolution: Bylaws can help prevent and resolve disputes within the corporation by providing clear guidelines and procedures for decision-making and dispute resolution. Flexibility: Bylaws can be tailored to the specific needs and goals of the corporation, allowing for customization and adaptability as the business grows and evolves. Components of Bylaws While the specific content of bylaws may vary depending on the corporation’s needs and jurisdiction, some common elements include: Corporate Name and Purpose: The bylaws should clearly state the corporation’s name and its purpose, which should align with the information provided in the Articles of Incorporation. Board of Directors: The bylaws should outline the size, composition, and qualifications of the board of directors, as well as the process for their election, term length, and removal. Officers: The bylaws should describe the roles and responsibilities of the corporation’s officers, including the president, vice president, secretary, and treasurer. This section should also include information on how officers are appointed, their terms of office, and the process for their removal. Meetings: The bylaws should specify the frequency, location, and procedures for conducting meetings of the board of directors and shareholders. This includes rules for providing notice, establishing a quorum, and voting. Shareholder Rights: The bylaws should outline the rights and responsibilities of shareholders, including the process for transferring shares, voting rights, and dividend distribution. Committees: If the corporation has committees, the bylaws should define their roles, responsibilities, and the process for appointing members. Amendments: The bylaws should include a provision outlining the process for amending the bylaws, typically requiring a majority or supermajority vote of the board of directors or shareholders. Creating and Amending Bylaws Bylaws are typically created during the corporation’s formation process, with the input of founders, directors, and legal counsel. The process begins by drafting a document that includes the necessary components and provisions tailored to the corporation’s needs. Once the bylaws are drafted, they must be approved by the corporation’s board of directors or shareholders. Amending bylaws is essential to adapt to changes in the corporation’s structure, goals, or legal requirements. The process for amending bylaws should be outlined in the bylaws themselves and typically requires a majority or supermajority vote of the board of directors or shareholders. Legal counsel should be consulted to ensure that any proposed amendments

A shareholder agreement is a legal document that outlines the rights and obligations of shareholders in a company. It is an essential document for any business with multiple owners, as it can help prevent disputes and provide clarity on the roles and responsibilities of shareholders. If you are considering creating a shareholder agreement for your business, it’s important to understand what to include. In this article, we’ll explore the key elements that should be included in a shareholder agreement. Shareholder Rights and Obligations One of the most important aspects of a shareholder agreement is outlining the rights and obligations of each shareholder. This should include details on how shares are owned and transferred, voting rights, and any restrictions on the transfer of shares. Additionally, the agreement should outline any shareholder obligations, such as the obligation to provide capital or to maintain a certain level of involvement in the business. Decision Making The shareholder agreement should also provide clarity on how decisions will be made within the company. This should include details on how board members are appointed, how votes are conducted, and how major decisions, such as mergers or acquisitions, are made. Providing clear guidelines on decision-making can help prevent disputes and ensure that all shareholders are informed and involved in the decision-making process. Management and Governance The shareholder agreement should also outline the management and governance structure of the company. This should include details on the roles and responsibilities of board members and officers, as well as any committees or advisory groups that are established. Providing clear guidelines on management and governance can help ensure that the company is run efficiently and effectively, and that all shareholders have a voice in the management of the business. Financial Matters The shareholder agreement should also address financial matters, such as how profits are distributed, how capital contributions are made, and how the company’s finances are managed. This should include details on how dividends are paid, how the company’s financial statements are prepared, and any borrowing or lending policies that are in place. Dispute Resolution Finally, the shareholder agreement should outline how disputes will be resolved. This should include details on the process for resolving disputes, such as mediation or arbitration, as well as any restrictions on the ability of shareholders to take legal action. Having a clear dispute resolution process in place can help prevent disputes from escalating and can provide a framework for resolving disputes in a fair and efficient manner. If you are considering creating a shareholder agreement for your business, it’s important to work with an experienced business law attorney who can help you draft a comprehensive and effective agreement that meets the needs of your business and its shareholders.

Selling a business can be an exciting and lucrative opportunity, but it can also be a complex and challenging process. From determining the value of your business to negotiating with potential buyers, there are a wide range of factors to consider when selling a business. If you’re ready to sell your business, here are some key steps you should take to ensure a successful and profitable sale. Determine the Value of Your Business Before you can sell your business, it’s important to determine its value. This involves taking into account a range of factors, such as the value of your assets, your revenue and profitability, and the overall market conditions in your industry. There are a number of methods for valuing a business, including the asset-based approach, the market approach, and the income approach. Working with a business valuation expert can help you determine the true value of your business and ensure that you get a fair price when you sell. Prepare Your Business for Sale Once you’ve determined the value of your business, it’s important to prepare it for sale. This can involve a range of tasks, such as cleaning up your financial records, streamlining your operations, and ensuring that all legal and regulatory requirements are met. It’s also important to ensure that your business has a strong online presence and that you have a clear marketing plan in place to attract potential buyers. Find the Right Buyer Finding the right buyer is critical to a successful business sale. This involves identifying potential buyers who are a good fit for your business and who have the financial resources and experience to successfully operate it. You can work with a business broker or use online marketplaces to find potential buyers, or you can reach out to your professional network to identify individuals or companies who may be interested in buying your business. Negotiate the Terms of the Sale Once you’ve identified a potential buyer, it’s important to negotiate the terms of the sale. This includes determining the purchase price, the payment terms, and any contingencies or conditions that must be met before the sale can be finalized. It’s important to work with an experienced business attorney during this process to ensure that your interests are protected and that the terms of the sale are fair and equitable. Finalize the Sale Once the terms of the sale have been agreed upon, it’s time to finalize the sale. This involves transferring ownership of the business to the buyer and ensuring that all legal and financial requirements are met. It’s important to work with an attorney and other professionals during this process to ensure that the sale is completed smoothly and that all necessary paperwork is filed with the appropriate authorities. Plan for Your Future Finally, it’s important to plan for your future after the sale of your business. This may involve reinvesting your proceeds in other ventures, retiring, or pursuing other personal or professional goals. It’s important to have a clear plan in place before you sell your business to ensure that you can successfully transition to the next phase of your life. By determining the value of your business, preparing it for sale, finding the right buyer, negotiating the terms of the sale, finalizing the sale, and planning for your future, you can successfully sell your business and move on to the next phase of your life with confidence and peace of mind. If you’re ready to sell your business, be sure to work with an experienced business law attorney who can help guide you through the process and ensure that your interests are protected at every step of the way.

Trusts can be used for so many different things including estate planning, tax benefits, income in the case of disability or illness, passing on a family business, and asset protection.  If you own a business, it’s time to consider the possible advantages a trust can provide. Definitions The Settlor – the person who puts the assets in the trust.  This person also usually writes up the rules for how those assets should be distributed and to whom in a Deed of Trust. The Trustee – usually a financial institution of some sort but it can be a designated person or even the settlor.  The trustee’s job is to protect, invest, and distribute assets in accordance with the terms outlined in the Deed of Trust and in the best interests of the beneficiaries. The Beneficiaries – the people or organizations designated to receive the assets or cash distributions from the trust.  These are usually the heirs of the settlor but they can be almost anyone, and in some cases, they can even be the settlor themself. What is a Trust? A trust is a fiduciary agreement where a person or persons (the settlor/s) place their assets in the hands of a trustee for future use by the people or organizations they name as beneficiaries. It’s a way to pass on your wealth on to generations as well as a way to control how that wealth is distributed.  You can also use a trust to protect your assets from creditors in future lawsuits as well as gain tax benefits in terms of your real estate investments.  There are many different types of trusts and they all have their own advantages and disadvantages. Common Types of Trusts Revocable Trusts A revocable trust, also called a living trust, is the most popular form of trust.  It’s often used for estate planning purposes as the assets placed in a revocable trust are transferred to the beneficiaries upon the passing of the settlor.  However, while still alive, the settlor retains the ability to control the assets and can even change or cancel the trust at any time.  This is why it’s called ‘revocable’ or ‘living,’ because everything from the assets to the beneficiaries can be changed or revoked. Irrevocable Trusts An irrevocable trust differs from a revocable trust in that it cannot be changed once it is in place.  This means that the people or organizations listed as beneficiaries will stay beneficiaries and the assets placed in the trust cannot be changed nor controlled by the settlor. There are a few exceptions to these rules, but in general, once the trust is finalized, it cannot be altered. Obviously, a revocable trust sounds more appealing due to the ability to continue controlling your assets, but an irrevocable trust offers one major advantage: asset protection.  Because the settlor gives up ownership over their assets, creditors generally cannot reach those assets because the settlor themself cannot access those assets.  This is a strong way to protect your property from future lawsuits against you or your business.  Discretionary Trusts A discretionary trust also provides asset protection benefits because the beneficiaries have no property rights with regard to the assets held within the trust.  This makes it difficult for creditors of the beneficiaries to pursue those assets.  The downside of this is that the trustee has discretion over the identity of the beneficiaries and the timing and amount of distribution of the assets.  In a discretionary trust, the settlor essentially hands over their assets to the trustee and trusts them to make the right decisions. Offshore Trusts Offshore trusts are usually irrevocable so as to further protect your assets from U.S. legal interference.  However, they can also be self-settled — meaning that you are both the settlor and the beneficiary.  Offshore jurisdictions add a layer of protection over an individual or business’s assets because your property is no longer tied to U.S. soil or the U.S. court system.  This means a judge in the U.S. cannot compel a foreign trustee to release your assets in the case of a lawsuit.  If a plaintiff wants to come after your assets in an offshore trust, they’ll have to litigate in that country.   Choosing the right type of trust is key in your asset protection strategy.  If you’re looking to avoid the possibility of your assets being seized in a lawsuit, you ought to hire a professional asset protection lawyer to advise you on the best path forward for your business.   When done correctly, your trust can protect you, your beneficiaries, and your assets in future legal battles.  However, trusts can be extremely complex, especially offshore trusts, so you’ll want to hire an experienced attorney to help guide you through the process. 

If you’re planning to start a business, or you already own one, you’re probably wondering how to avoid future lawsuits.  If you’re not wondering that, well you should be.  Statistics show that 90% of all businesses are engaged in litigation at any given time.  To avoid major lawsuits and reduce the losses you may face, you’ll need to implement a sound asset protection strategy. There are different paths you can take to protect your assets and those strategies will vary depending on your specific needs and objectives.  For example, real estate assets are typically protected through a combination of LLCs and corporations to mitigate risk, while personal assets may be placed in a trust or shielded by liability insurance.  Usually, you’ll have to employ multiple asset protection strategies to achieve the ultimate level of impenetrability — although no strategy is a 100% guarantee.  Choose the Right Business Entity The first step toward asset protection is to choose the right business entity.  Some business entities provide more protection than others.  For example, you’ll want to avoid sole proprietorships and general partnerships as these do not provide adequate separation between your personal assets and your business.  This essentially means that should a creditor pursue a claim against your company, they can come after your personal assets to pay for damages.  To protect yourself against this, you’ll want to incorporate your business.  There are a variety of ways to incorporate your business.  You can become an S-Corporation, a C-Corporation, or even a nonprofit corporation.  Each of these types of business entities has its own distinct advantages (and disadvantages) so you’ll want to be careful about which you choose.  An experienced business attorney can help you determine which entity is best for your business goals.  Use Proper Contracts and Agreements When running a business, it’s easy to become overly-familiar with your clients and other companies you conduct business with.  While it’s great to build those connections, you want to be sure that you’re also using legal contracts and agreements for your business.  Instead of just sending an email or a text to confirm a lease, for example, you should have a formal lease agreement drawn up to protect you from liability if things do go wrong.  Always get it in writing.  All different types of business contracts from partnership agreements to employee contracts must have careful wording to ensure you’re adequately protected.  This is why it’s a good idea to hire a business attorney that can help you craft an effective contract as well as fight on your behalf should something be contested.  If you rely on any informal agreements to conduct your business, a savvy litigator may be able to use them as evidence to blur the line between personal and business activities, leaving your assets open to more risk. Move Your Assets to a Trust You can also protect your assets by putting your personal assets in a trust. A trust is an agreement where you place your assets in the hands of a trustee for future use by beneficiaries.  The benefit of placing your assets in a trust is that you technically no longer have ownership of them, the trust does.   However, there are different types of trusts and some are more protective than others.  A revocable trust or living trust allows you to still control your assets, but that means you (and the courts) can access them in the case of a lawsuit.  An irrevocable trust, on the other hand, requires you to give up total control over your assets so they are protected from creditors and debtors.  But the downside is your trust will need to be handled according to your original wishes, meaning you can’t make changes or control your assets any longer. You can also set up a trust for your business, not just one for your personal assets.  In cases like this, your business will be owned by the trust, not you, and therefore your company will be protected from creditors and lawsuits.  There is a catch though: you’ll have to have someone set up an irrevocable trust for you during their lifetime in order to start your business with this airtight protection.  If you already have a business, you can transfer your business into a creditor-shielded asset protection trust, but there are many restrictions.  Your protections will vary by state, but this will provide a way to protect your business assets from creditors and significant estate taxes.  This is especially the case if you use an offshore asset protection strategy.  Get Limited Liability Insurance Another key part of your asset protection strategy will be having strong liability insurance.  The insurance you purchase should cover the types of risks that your business faces — such as car insurance for a trucking company or malpractice insurance for a medical professional.  Insurance likely won’t cover you in every situation, but it can be a big help. You can also get an umbrella insurance policy for your personal assets to cover any gaps in your homeowners or auto insurance policies.  This should help protect your assets from seizure and provides additional liability protection if you are named in a lawsuit.  Instead of being forced to turn over your personal assets if you are held responsible for damages of some sort, personal umbrella insurance will cover the costs up to the amount you purchase and protect your assets. Speak with an Asset Protection Lawyer While it is possible to protect your assets after a lawsuit has been filed, the best option is to protect your assets beforehand.  If you wait until you’re in the middle of a lawsuit, you could face legal obstacles to blocking third parties from accessing your assets.  That’s why the best time for asset protection is NOW.  Discuss your options with an experienced asset protection attorney who can guide you through what’s available to you and help you narrow down the best strategy for your business.   Our team at Bagla Law Firm has years of…

If you own a business or property, you may be wondering how best to protect your assets from government seizure or creditors.  Lawsuits can happen to any person and any business, but forming a trust will reduce and can even eliminate the risk to your hard-earned empire. What is a Trust? A trust is a fiduciary arrangement that allows a trustee to hold assets on behalf of a beneficiary. Trusts separate legal ownership of assets from the individual (the settlor), and places that legal ownership into a separate entity (the trust). The settlor, or the person who puts the assets into the trust and writes up rules for their distribution in a Deed of Trust, hands over control of the assets to the trustee.  The trustee’s job is to protect, invest, and distribute assets in accordance with the terms outlined in the Deed of Trust. The beneficiaries are the people or organizations designated in the trust to receive benefits such as assets or cash distributions. There are many different types of trusts and they all have their own advantages and disadvantages. For example, a revocable trust allows the settlor to make changes to the beneficiaries, the assets, and their distribution.  The trust can be canceled at any time, and the assets can be accessed throughout the settlor’s lifetime before transferring to the beneficiaries upon the settlor’s passing. On the other hand, an irrevocable trust cannot be changed once it is finalized.  The settlor will no longer have any control over the assets placed in the trust and the trustee will manage the trust according to the instructions originally set in place by the settlor.  By eliminating the settlor’s ownership of the assets, creditors generally cannot come after those assets in a legal battle.  This type of trust provides great protection for your assets against the threat of future lawsuits. How Can a Trust Be Used to Protect my Assets? When you or your company are defendants in a lawsuit, a creditor can make claims against the assets you hold.  This means that they can go after your house, car, bank accounts, and other belongings to cover the debts that they think you owe. If your assets are placed in a trust where you have limited control over those assets, creditors will have a more difficult time making claims to the assets held by the trust.  While you can still obtain benefits from the trust, you do not control the distribution of the assets; therefore, creditors cannot force you to hand over said assets as payment.  The less control a beneficiary or settlor has, the harder it is for a creditor to seize the assets located inside of a trust. In 17 U.S. states, you can have a self-settled spendthrift trust.  California is not one of those states.  A self-settled asset protection trust is one in which the settlor, or the person who creates the trust, also retains rights as a beneficiary of the trust, but their assets are still protected from creditors.  In California, this is not possible. Due to California Probate Code Section 18200, if the settlor has the ability to revoke a trust or regain use of trust property as a beneficiary, they are considered to have full beneficial ownership and are therefore subject to creditor requests to turn over their assets.  If you want to protect your assets from seizure in California, you have to be very specific in your trust choice to ensure that your ownership over the assets you’re protecting is legally severed. To avoid your assets being seized in lawsuits, you must have an irrevocable trust in which you are not named as a beneficiary.  If you set up an offshore trust, you’ll be protecting yourself even more.  This is because creditors who want to go after your assets will have to litigate in the jurisdiction of your offshore trust.  Picking the right offshore location is key because many countries’ legal systems are set up to protect the assets of the defendant rather than comply with creditors’ interests, offering you even further protection. Hiring an asset protection lawyer can help you determine the best asset protection strategy for your goals.  It’s not ‘if’ your business gets sued, it’s ‘when.’  You can prepare yourself ahead of time by ensuring your property is protected, both by choosing the right business entity and by implementing asset protection strategies such as an offshore trust.  Contact us at Bagla Law Firm to learn more about your options.

Each business entity has its advantages and disadvantages. There isn’t an overall perfect business type; only a business type that is perfect for your business. Here, we’ll discuss the benefits of LLCs over corporations. Separation of Assets Without Complexity LLCs retain the simplicity of a sole proprietorship or partnership, while providing the liability protection that corporations have. When you incorporate your business, you separate your personal assets from your business’ assets. This limits your liability. Meaning that, if anything were to happen down the road, creditors and debtors cannot come after your personal holdings to account for your business’ losses. While this typically applies to all corporations, it also applies to most LLCs (with some exceptions) — This sets them apart from other simple business structures like sole proprietorships or partnerships. Tax Advantages One of the benefits of forming an LLC instead of a corporation is the fact that LLCs can choose how they want to be taxed. That’s right, it’s up to you!  You can choose to be taxed as a sole proprietor or partnership (which is the default for LLCs); but you can also choose to be taxed as an S-Corporation or C-Corporation too. The choice lays in your hands. C-Corporations are subject to what is known as ‘double taxation’ where the business pays corporate income tax and then its shareholders must also pay taxes on the dividends they receive. LLCs and other business entities can have a pass-through taxation structure where the taxes are passed through to the owners on their personal tax returns. Each tax structure has its benefits and disadvantages, so you’ll want to talk with a business attorney to determine what structure will be best for your LLC. Flexibility LLCs don’t have any restrictions on the type or number of owners (called “members”) they can have. While S-Corporations also avoid double taxation, they cannot have more than 100 shareholders, cannot have foreign shareholders, and cannot have corporations as shareholders. LLCs can have the pass-through taxation benefit while also having corporations, foreign entities, or individuals as ‘members’. LLCs also don’t have a formal structure that they need to rigidly follow. Corporations, on the other hand, have an elected board of directors that sets and oversees policies as well as officers or managers that run the business’s daily operations. With a lack of formal structure, the owners of LLCs have the flexibility to make their own decisions about how they want to run the company. They also have control over how the profits are distributed. Unlike corporations, LLCs don’t have to distribute profits evenly or according to ownership percentages. Less Requirements Corporations typically have to hold shareholder meetings, provide annual reports, and keep extensive records. LLCs, however, do not have these requirements. Fewer regulations mean less paperwork and make it easier to satisfy governmental requirements. If you’re planning on starting an LLC, or you’re looking into which business entity would be best for your business, schedule a consultation with us at Bagla Law Firm. We’ll be happy to assist you on your business journey.

You’ve looked into the different business entity options and discussed your business goals with an experienced attorney.  You’ve finally decided that you want to form an LLC, but now what?  Here we’ll explain the steps for starting an LLC in San Diego, California.  This is similar to most states, but California has a few specific requirements you’ll want to be sure not to miss. Write Business Plan The first thing you should do is write a business plan. While this step is technically not required, it will help you create an effective growth strategy by outlining your objectives and laying out a plan for how to meet them. It also helps your team better understand your business and is key to obtaining funding. Choose a Business Name The next step for forming an LLC in San Diego is choosing a business name. Not only must your name include “LLC,” “Limited Liability Company,” or some other iteration of that title, but it must also be unique to your business.  By searching the Secretary of State website, you can find out if your business name ideas are already taken. You can also file a name reservation request form to reserve your chosen business name for 60 days while you complete the rest of the steps. Choose a Registered Agent The state of California requires your LLC to have a registered agent that will be visible in the public record and can receive legal documents on behalf of your LLC.  You can hire a company or individual unrelated to your LLC to be your registered agent, or a member of the LLC can act as a registered agent.  The LLC itself, however, cannot act as its own registered agent. File Articles of Organization In order to become an officially recognized LLC, you must file Articles of Organization (Form LLC-1) with the California Secretary of State.  This will include all of the relevant information about your business, including the name and address of the business, its purpose, management structure, and the name and address of the registered agent you chose.  The address cannot be a P.O. Box and this step does cost $70. Get a Federal Tax ID Number If your registration is approved from the previous step, you will receive a certificate that confirms your LLC formally exists in the state of California.  You can use the information on this document to obtain an Employer Identification Number (EIN) through the IRS.  While not required for single-member LLCs, this allows you to get a business bank account, hire employees, and helps you with filing and managing your taxes. Create an Operating Agreement The state of California requires that LLCs have an operating agreement.  This document does not need to be filed anywhere and technically doesn’t even need to be written down.  However, this is what courts will use to settle disputes and determine if your business has operated according to this agreement.  So having it readily accessible if needed is a good idea. File Statement of Information Within 90 days of forming your LLC, you must file a statement of information (Form LLC-12).  This document contains similar information to the Articles of Organization but also contains your California Secretary of State filing number and the name and residence of each member of your LLC.  This costs $20 and needs re-filed every two years. Get Business Licenses as Needed Depending on your business, you may need to obtain certain licenses before you can operate.  For example, if you plan to sell alcohol, you will need to get a liquor license.  If your business includes some type of clinic such as a dental office or pharmacy, you’ll have to get a clinic permit.  There are a variety of different licenses you may need, but every San Diego business needs a San Diego business license in order to conduct business within the city limits. Register with the Appropriate California Taxing Authority There are a variety of taxes you’ll have to pay.  Every LLC in California must pay an annual $800 franchise tax fee.  You may also need to register with the California State Board of Equalization if you plan on collecting sales tax, and you’ll need to register employer taxes with the California Employment Development Department.  There are some other taxes that you may have to pay depending on your business, and with new legislation, you could be exempt from the annual franchise tax fee for the first year. While technically you do not need a business lawyer to help you set up your LLC, the process can be complex and an experienced attorney can help you navigate it.  In fact, when speaking with a business attorney, you may discover that you want to register your business in a different state. It’s important to have all your ducks in a row when creating your business so that you don’t run into legal troubles down the road.  Here at Bagla Law Firm, we’re proud to help our clients figure out what path will work best for their business and guide them in setting up their business entity the right way.  Contact us today to schedule a consultation.

If you own any assets, you need asset protection. Protecting your assets is as important as acquiring them in the first place. If you do not protect your assets, all the hard work you put in to be able to obtain them can be quickly undone. When you have a legal and effective asset protection strategy in place, you can effectively prevent a claim against your hard-earned assets by, among others; a creditor, a person who wants to challenge your estate after your passing, or a partner in the event that a relationship breaks down in the future. People assume that asset protection is only for wealthy people, but the reality is that, as long as you have anything of value, you can benefit from asset protection. There is a range of assets that need protection. Read on to learn what types of assets you should protect, why you need asset protection, and ways of protecting those assets. What Assets Need Protection? There are many assets that need protection. They include the following; Homes Bank accounts Personal property Business property and premises Business contents, such as equipment and stock Real estate property Goods in transit Intellectual property Cash and credit Vehicles, including commercial vehicles Boats Planes Inheritances Generally, asset protection is about protecting your business and personal assets. Why Do You Need Asset Protection? As already mentioned, you need asset protection for various reasons, such as to prevent creditors, a partner, or someone else from making a claim on your assets. If, for example, a creditor files a lawsuit against you to recover the money you owe them, you face the risk of losing assets such as your home, car, and money. Furthermore, if you are caught up in a lawsuit, it means you need to spend money on legal fees. How Can You Protect Your Assets? There are many ways to protect your assets. The following is a look at some of the ways you can consider; Limited Liability Companies (LLCs) An LLC can offer you the opportunity to protect your personal assets from business creditors. However, an LLC cannot protect your business assets from business creditors. Offshore Trusts An offshore trust is an estate planning tool that grants a person legal jurisdiction outside of the United States of America. Putting up an offshore trust involves creating a trust in another country. Once an offshore trust is created, it protects assets from domestic creditors. Insurance Policies Liability insurance policies can also help you protect your assets. The following insurance policies can help you secure your assets; Umbrella policies Life insurance policies Malpractice policies A life insurance policy, for example, can help you protect your assets from seizure by a creditor who has obtained a court judgment against you. Prenuptial Agreements Lastly, a prenuptial agreement, which is an agreement that couples sign before marriage, can help you protect the assets you have before marriage. A prenuptial agreement can even help you protect future assets that you specify will be considered yours in the event of a divorce. Contact Bagla Law Firm for Legal Help If you want to know more about the assets, you should protect and how you can protect those assets, do not hesitate to contact the experienced and dedicated San Diego asset protection lawyer at Bagla Law Firm. We can help you develop an asset protection strategy best suited for your assets. You can call 760-579-6789 or fill out our online contact form to schedule a consultation.

Business owners of all types need to familiarize themselves with the concept of incorporating.  No matter what kind of business you undertake or the service you provide, there are several significant benefits to becoming a corporation.  Let’s look at some of the important things to know about setting up a corporation. Exactly What is a Corporation A corporation is a business structure.  When the owners of a company incorporate, they are establishing their business as a separate legal entity.  The act of incorporation gives the owner significant personal legal protection.  This is because once incorporated, a company enjoys the distinction of “corporate personhood.”  The corporation is the entity that subsequently enters into contracts, borrows money, and goes to court.  As such, the owners cannot be personally held liable for the corporation’s liabilities and debts. Business Structure of Corporations There is a two-level structure to most corporations: Ownership level: shareholders are the owners of the corporation, whether private or public. Active management level: the shareholders usually elect a board of directors, who in turn are responsible for the selection of corporate officers, which would include titles such as: Chief Executive Officer (CEO) Chief Financial Officer (CFO) Etc. In smaller corporations, shareholders often take on the roles of corporate officers; this is usually not the case with larger corporations. The Two Most Common Types of Corporation Although there are several types of corporation designations, by far the two most common are: C Corporation: this is the most basic form of corporation.  C corporations can have an unlimited number of shareholders, and shares can be traded publicly, although this is not mandatory.  They can also be privately held, with the shareholders being the owners. S Corporation: rather than a business structure, an S Corp is a form of tax status.  The main advantage is that the owners can pass through the income the business generates onto their personal tax return.  This allows them to avoid double taxation, a significant benefit. Other Types of Business Entities Apart from C Corporations and S Corporations, there are other entity types that may apply to certain types of businesses.  These include: Professional corporation Limited liability company Non-profit corporation Public benefit corporation A lawyer will tell you if any of these types of entities apply in your specific situation and the advantages of being set up in a particular way. Benefits of Incorporating Your Business Probably the single greatest benefit to forming a corporation is that it limits your personal liability.  Having the distinction of corporate personhood means that in the event of any issues down the road, the shareholders are not personally liable for any debts (their personal assets cannot be seized, for example). There are also potentially significant tax advantages to incorporating your company.  The aforementioned pass-through taxation feature for S corporations is just one of them.  There are also tax deductions available to corporations that do not apply to business entities such as sole proprietorships and partnerships. We’d be happy to answer any questions you may have about forming a corporation. Contact our team to learn more.