Property Under Siege: Protecting Your Business Assets

Asset protection can be tricky business. Having all of your ducks in a row and proper insurance doesn’t ensure your assets’ protection. The way you conduct business can also put your assets at risk. CBS consulting services are an excellent solution for asset protection. The tax planners at Corporate Business Solutions Inc. can thoroughly assess your organization and make recommendations. If you’re worried about IRS seizures, a consultant can explore the tax consequences of business decisions you have made or plan to make.

Here are a few scenarios to give you an idea of how important it is to secure your business and personal assets.

A Home Improvement Business

Brian was the owner of a home improvement business. He didn’t take much home in salary, but admitted to getting his share in other ways. His financial statements were reviewed by a tax consultant and it became apparent that Brian was using the business as a piggy bank for personal expenses. The term for this practice is commingling.

Commingling can bring about a number of issues. For one, if federal or state tax authorities were to audit Brian’s books, his expenses would be rendered as taxable compensation rather than tax deductible expenses. In a worse scenario, a clever attorney could pierce Brian’s corporate veil, which is supposed to safeguard Brian and his family. If the attorney wins, Brian would lose his corporate veil and would have to be declared as a sole proprietor, since he is the sole shareholder of the corporation. This means that both business and personal assets can be attached to the business. In other words, this puts his personal assets at higher risk of seizure when things go awry for his company.

In this case, CBS consulting services should be acquired to assess your options.

Auto Parts Manufacturer

Ron was a successful manufacturer of precision parts. His company grew quickly, so he had to add on a second shift in order to keep up with demand. Ron ran into a problem with a new customer who fell too far behind on his invoices and refused to agree to payment terms. To prevent this from happening again, Ron decided to make cash on delivery payments mandatory. The customer needed components shipped to car companies and decided to dispute Ron’s COD decision. Ron’s attorney filed a $185K lawsuit to recover the outstanding invoices.

Ron’s opponent refused to provide a corporate minute book during the discovery phase. He was afraid of the the court finding out that the three-year-old company’s shareholders had never held a board meeting. In his state, it was required for board meetings to be held at least once a year to maintain a corporation status.

After hearing both sides of the argument, the judge ruled in Ron’s favor. Ron’s attorney then requested a five minute recess, contacted his paralegal and asked her to file a lis pendends on each of the partner’s homes. This is a property lien that’s filed in anticipation of a legal settlement. Partners don’t have corporate veil protection, which means their homes could indeed be seized. The case settled fast at nearly the full amount of the dispute, without going through an expensive trial. Ron would have likely still won the case, even if the customer remained a corporation. However, the owners made a big mistake and placed their personal assets at risk.

Asset protection should always be a top priority for your organization. CBS consulting services can be employed to set up a plan that will safeguard your business and personal assets from a potential siege. The experts at Corporate Business Solutions Inc. have experience helping businesses avoid scenarios such as these.