Among the many options of corporate structures available today, the American LLC (Limited Liability Company) is still one of the main corporate structures chosen by investors and families around the world. The combination of the favorable business environment, the political and economic stability of the United States, the dollar as a currency, the tax advantages of an LLC and, in addition, the particularities of Delaware and Wyoming, make the LLC an excellent asset protection tool.

 

Before discussing in detail the advantages of an LLC, it is worth noting that the aforementioned asset protection is not intended to defraud creditors. The objective is to limit the civil liability of investors or family members, preventing eventual liabilities from professional activity from reaching the family's assets.

 

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What are liabilities?
Liabilities, whether personal or corporate, are obligations that a person must honor in order to support himself. It becomes increasingly necessary for the business community to understand that corporate planning is vital for the performance of their company in the market. Professional advice should be considered in all relevant company decisions.

 

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What is Limited Liability?
The limited liability company, in Brazil simply known as Ltda and in the United States as LLC, is a specific type of company in which the partners cannot be held responsible for losses arising from the company's activity beyond their holdings (shares). This legal separation allows, in most cases, a person's assets not to be pledged in favor of his company's liabilities.

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How can limited liability protect your wealth?
In the event that an LLC is unable to pay off its debts, creditors may request the judicial blocking of the company's accounts and assets. However, your personal assets are protected and will not be accessed by the courts to honor these obligations. The same occurs in the opposite way, when some debt exists in the individual partner of the LLC. It is necessary to be aware that limited liability loses its effect when abuse of legal personality is proven and that the purpose of this structure was to defraud creditors.

 

Generally, protection of personal assets is granted even in cases where debts cannot be fully settled with company assets. However, LLC members may be liable for individually acquired debts as well as unpaid taxes and liabilities arising from any personal wrongdoing.

 

In states like Delaware and Wyoming, there is another factor that attracts the formation of thousands of holding companies (asset management companies and/or participation in other companies) annually. In both states, there is no public bookkeeping of the company's articles of incorporation. As a result, the identity of the company's beneficiaries and directors are not public data. In Delaware, there is also a court specializing in corporate affairs, which provides greater legal certainty for those seeking to form a company to raise funds or receive investments.

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A US-based LLC is permitted to have a branch or subsidiary in other jurisdictions, including Europe and Brazil. This allows investors, families and entrepreneurs to enjoy the advantages of an LLC to set up holding companies in other countries. International estate planning, however, is critical in this case to align the tax and ancillary obligations of the United States and the countries where the taxpayer is a tax resident.

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How to increase liability protection?
Definitely, opening a company on a website is not the best option. We highly recommend that you consult a qualified and experienced professional in the formation of companies abroad. In the US, companies are not required to file a social contract - here called the Operating Agreement. Companies, upon being registered with the Secretary of State, receive an Articles of Organization or Certificate of Formation - a simple document, with the objective of registering the birth of the company. However, this document does not establish management clauses, withdrawal of partners, tax election, among other aspects.

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We offer the preparation of articles of incorporation for companies established throughout the States.

 

How can you open an LLC?
The process of opening an LLC is simple and fast with E&G. Contact us for a free consultation. To set up a company, all you need to do is fill in a simple form and pay the opening fees. We take care of the entire process.

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Disclaimer:
The information contained in this article is for informational purposes only and should not be construed as legal advice. E&G Financial Group LLC is not a law firm and our employees are not acting as your attorney.

 

We are registered as Tax Preparers with the US Internal Revenue Service (IRS).