Hi Lee Phillips again.
I want to talk for a minute
about an issue that's become quite personal to me.
Should I change my corporation to an LLC?
And I'm going to say the answer is yes
probably absolutely yes.
In fact I have run LegaLees corporation for the last
32, 35 years, whatever it is
and I am now changing my company
to an LLC.
The reason is
the LLC has the exact same corporate shield
as a corporation
but it also has this reverse asset protection
aka
the charging order protection
which protects the company
from the personal liabilities of the owners.
Now I don't think as an owner I have any personal liabilities
but who knows what's gonna happen?
I have a friend who recently
by the fluke of a circumstance
is being sued
and there's a good chance he'll lose the lawsuit
because of nothing the he even did wrong
but he's being sued
he has a nice company
the company is 35-40 years old
it's a good company
his sons are taking over the company
it's a family company
he owns all of the stock
it's a corporation
and in this lawsuit
he may well lose that stock,
well as soon as he loses the stock
whoever has the stock
owns his company
it doesn't matter that his sons have worked in the company for years
and they want to operate it.
In this lawsuit he loses that stock,
he loses the company.
The kids lose all of their future in this company.
Everything's gone.
If he had had the company as an LLC
then he would have gotten a judgment against him
they would have had to have gotten a charging order
and basically put a lien against the company until the company issued a profit
they don't get anything
and the company's probably not going to issue many profits because
why would I give the profit to that guy anyway?
So at that point he goes in and he negotiates
with the people who are suing him
and says you know you're not gonna get anything out of this company
I will pay you off
X number of dollars
pennies on the dollar
and you go away.
Works actually pretty good.
But he didn't do that.
Now I have a corporation.
I've had a corporation for years.
I have no creditors, I have nobody that's coming after me.
I hope nobody ever does come after me.
But
and in fact my company doesn't own a lot of assets
so I go, I don't know you know do I change it to an LLC from a corporation?
It's been LegaLees Corporation
and the answer is yeah I'm gonna change it.
Oh we have some contracts
we have some computers
we've got some stuff that the company owns
so why even bother with it?
Let's just change it to an LLC
then if I get in trouble
the company isn't in jeopardy.
So today
the answer is you've got a corporation?
yeah, I'd change it to an LLC
almost no question in my mind
I would do that.
When you do that
you're gonna have to do a bunch of stuff.
You've got to change all of your letterheads
and your business cards and
and your products and
and all of that sort of stuff and
it's going to take me a while
to run through all the inventories and things that I have
and I have to notify everybody
hey I'm not a corporation anymore
I'm an LLC
you got to start thinking to me as an LLC not a corporation
because if I don't notify them they have the right to do that
and by the way you were just notified
so
I'm notifying you, okay?
I'm not going to be a corporation anymore
I'm going to be an LLC.
So hopefully that will protect the company
from what happens to me
and yeah
let's change the corporations to LLCs.
They have the same corporate shield
same tax structure
whatever tax structure you've got
and they have the charging order protection
which does come into play.
And so let's just do it.
Lee Phillips talking on
Should I change my corporation to an LLC?