US technology companies and digital startups have consistently had low unemployment rates of 1.5%. This figure is very low when compared to the average national rate of 5.2%. In August 2021, figures released by the US Bureau of Labor Statistics showed that tech company hirings reached a two-year high, adding an estimated 26,800 jobs in various positions, both technical and others.
Developing a digital startup requires vast entrepreneurial efforts on your part. Innovation and business growth are probably foremost on your mind, but as you take your first business steps, you must take some time to consider the importance of asset protection.
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Taking steps to protect your assets gives you complete control over your financial affairs, protecting you from losses incurred from poor business decisions, creditors, bankruptcy, and even divorce.
Wyoming has become a popular state for digital startups to set up holding companies. The state has flexible domicile laws, allowing corporations and LLCs to establish their parent company’s there, with subsidiaries in the state and elsewhere.
Wyoming Trust and LLC Attorney have years of experience in asset protection planning and corporate services like LLC formations. They recommend you take these steps to ensure the best asset protection for your digital startup. Take a closer look at some of the solutions proposed by Wyoming Trust & LLC Attorney here: https://wyomingllcattorney.com/
As part of your business development plan, you are called to consider the best type of business entity for your startup. It might seem easier for you to simply form a sole proprietorship with a DBA, but this immediately places your personal assets at risk from your creditors or a potential lawsuit.
Establishing a formal business entity like a Wyoming Corporation or a Wyoming LLC is the best protection for your assets. Take some time to consider how each type of business entity affects you taxwise before deciding.
C-Corps have the advantage of raising capital far easier, can opt to retain earnings instead of distributing them, salaries are a deductible expense, and these entities have an unlimited life.
Forming a Wyoming LLC offers added advantages that include less annual paperwork, no ownership restrictions, and the choice of different share classes.
Every digital startup must include the protection of business insurance into its budget to protect it from any risks. Consider the aspects your business needs to protect, making sure the policy is suitable for the tech industry and offers full protection.
As an entrepreneur, you must always protect your corporate veil. This entails ensuring that there are no gray lines, even if you have formed the correct business entity. Enmeshment of the two can be prevented by ensuring your personal funds and business funds are always separated. Your business must have its bank account under the business name. Any commercial property belonging to the business must be registered in the business name, never your name.
Never act carelessly or try to cut corners when it comes to leasing agreements for property and equipment. The same applies when signing any contracts or subcontracts for projects. Additionally, when hiring employees, make sure to have proper contracts and insure them. Any careless slips can easily allow your creditors to pierce your corporate veil.
You may think that opening a trust is a bit extreme and time-consuming, but it is one of the safest ways to protect your assets from corporate debt or lawsuits. All personal assets, including property, stocks, cash, and investments are placed in a trust. The trust becomes the owner of all your assets, and these are overseen by an independent trustee. The trustee’s job is to designate profits to your beneficiaries. Trusts can be tailored according to your particular family needs.
An asset protection strategy will often combine the asset protection trusts with a holding trust and subsidiaries, utilizing Wyoming laws to ensure that you benefit completely.
As you plan your digital startup, take the time to consider your options about the business jurisdiction, the best type of business entity, an asset protection trust, and the best insurance protection. These are all vital aspects for protecting everything you have accrued before deciding to become an entrepreneur. Finally it is worth noting, proper planning for a digital startup is vital to protecting your assets correctly.