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The API Law 6 Point Business Exposure Assessment
The API Law Business Exposure Assessment(BEA), has been developed to allow you to manage your risks many business owners don't see coming.
Our unique 6 point assessment is a powerful tool to start to analyze and identify potential liabilities to your company. It will help you start to visualize a risk management strategy with our firm.
API Law will help you deploy the legal tools you need to protect your assets, reduce liability exposure and, ultimately, the business itself.
Do you have a current business structure?
Do you have a current business structure?
What is a "business structure"?
We are referring to the process of setting up a formal business entity like a Corporation or Limited Liability Company (LLC), with your Secretary of State.
If you answered "Yes", are you the listed as the legal owner?
If you have chosen to have your "legal person", you, to be the the owner of the company, there may be many liabilities you have not considered with this structure.
Disadvantages of starting a business without a formal structure include:
- Personal liability. If you're a sole proprietor or general partner and your business is sued or has unpaid creditors, you personally face liability. Everything you own is at risk.
- Lack of structure. Many business partners don't give much thought to the details of how to divide responsibilities, profits, and losses.
- Limited funding. Banks and investors may be reluctant to loan or invest money in a sole proprietorship or general partnership.
- Proprietary name. Two business entities can't have the same name in the same state, and forming an LLC helps ensure that the name you have chosen is unique, and will stay that way.
Are you your own Registered Agent with the Secretary of State?
Are you your own Registered Agent with the Secretary of State?
A registered agent is an individual or firm selected by a business to receive tax and legal related communications from the state of incorporation. Both LLCs and corporations are required to designate a registered agent.
What you risk by choosing to be your own Registered Agent.
What you risk by choosing to be your own Registered Agent.
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Privacy and anonymity.
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Losing your legal status with the state.
Incurring late penalties.
Missing critical legal notices.
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Making yourself an easy target to find.
Do you have an Operating Agreement?
Do you have an Operating Agreement?
Limited Liability
The presence of an operating agreement helps to ensure that the courts will recognize your personal limited liability.
Dispute Avoidance
Jointly owned LLCs should document their joint decisions on decision-making and profit sharing.
Government Mandate
Without an Operating Agreement, your LLC may be required to follow any of your state’s default operating conditions.
The "Buyout"
Provisions for a buy-sell or buyout are critical. Death, divorce, disability or retirement will require planning in advance to avoid chaos in a business.
Percentages of Ownership
Contributions in the form of services, property, or cash typically define percentages of ownership. This needs to be clarified in precise terms to avoid internal lawsuits.
Other items to consider...
- Is the Operating Agreement up to date?
- Voting Powers
- Member rules and violations of conduct
- Timely Amendments
Are you comingling any personal monies and or assets with your business?
Are you comingling any personal monies and or assets with your business?
When you’re mixing business and personal expenses, you’re putting yourself at risk, both financially and legally. Additionally, commingling can lead to serious tax problems. To ensure you don’t end up on the IRS naughty list, make sure you understand how to keep expenses separated and your tax filings compliant.
What is the commingling of funds?
Commingling of funds means that you’re treating your business’s money as your own. Some ways to commingle funds are:
1. Bank deposits made payable to your business from a client are deposited into your personal bank account.
2. Making withdrawals from your business checking account to pay personal expenses without documentation.
3. Depositing personal money to pay for business expenses.
4. Using the same bank account for your business and personal needs.
5. Writing business checks for personal expenses.
6. Using a personal credit card for business expenses to get points.
7. Moving money back and forth between your business and personal accounts without documentation.
The Problem with Commingling Funds
If you commingle funds, you could lose your LLC’s or corporation’s liability protection due to what is known as “piercing the corporate veil”.
Having your “veil pierced” sounds like a bad thing. It is.
All that work you did to form an LLC or corporation — filling out Articles of Organization/Incorporation, paying filing fees to the state, etc. — will be for nothing as far as protecting your assets from creditors if your corporate veil is pierced.
There are several factors that courts look at when deciding whether to pierce your company’s veil and hold you personally liable for company debts and lawsuits. One important factor is the presence of commingled funds. If you treat your business’s money the same as your own, then you risk the exposure of your personal assets.
This means that you didn’t keep up the necessary formalities to preserve your LLC or corporation as a separate legal entity.
What is the commingling of funds?
Commingling of funds means that you’re treating your business’s money as your own. Some ways to commingle funds are:
1. Bank deposits made payable to your business from a client are deposited into your personal bank account.
2. Making withdrawals from your business checking account to pay personal expenses without documentation.
3. Depositing personal money to pay for business expenses.
4. Using the same bank account for your business and personal needs.
5. Writing business checks for personal expenses.
6. Using a personal credit card for business expenses to get points.
7. Moving money back and forth between your business and personal accounts without documentation.
The Problem with Commingling Funds
If you commingle funds, you could lose your LLC’s or corporation’s liability protection due to what is known as “piercing the corporate veil”.
Having your “veil pierced” sounds like a bad thing. It is.
All that work you did to form an LLC or corporation — filling out Articles of Organization/Incorporation, paying filing fees to the state, etc. — will be for nothing as far as protecting your assets from creditors if your corporate veil is pierced.
There are several factors that courts look at when deciding whether to pierce your company’s veil and hold you personally liable for company debts and lawsuits. One important factor is the presence of commingled funds. If you treat your business’s money the same as your own, then you risk the exposure of your personal assets.
This means that you didn’t keep up the necessary formalities to preserve your LLC or corporation as a separate legal entity.
Are you currently compliant with the new federal Corporate Transparency Act?
Are you currently compliant with the new federal Corporate Transparency Act?
What is it?
The Corporate Transparency Act* represents the culmination of more than a decade of congressional efforts to implement beneficial ownership reporting for business entities. Fully implemented in 2024, it will create a database of beneficial ownership information within the US Financial Crimes Enforcement Network (FinCEN).
Who does this apply to?
If you control or own, or even lend money to an LLC, for profit corporation, Limited Partnership, LLP, LLLP, or Statutory trust, you are obligated to file an annual report with FinCEN (US Financial Crimes Enforcement Network). This is required by your company and its owners.
When does this law start?
The Corporate Transparency Act was passed in 2021 primarily to combat money laundering and terrorism. Bad actors – people who are engaged in money laundering and other illicit activities – don't do it in their own name. They do it through LLCs, corporations, and other similar entities. As of January 1, 2024, all business entities will be required to strictly adhere to and comply with the CTA.
Why do I need to report?
Non reporting and failure to file will more than likely result in severe civil and criminal penalties. Senior officers of an entity that fails to file a required BOI report may be held accountable for that failure. This may include fines up to $10,000 and up to two years in prison. With up to $500/day potential fines, it is critical you understand what your responsibilities are and where to get help.
Do you have Probate protections in place for your family?
Do you have Probate protections in place for your family?
gavelWhat is Probate?
Probate is a legal process that takes place after someone dies. It includes:
- proving in court that a deceased person's will is valid (usually a routine matter)
- identifying and inventorying the deceased person's property
- having the property appraised
- paying debts and taxes, and
- distributing the remaining property as the will (or state law, if there's no will) directs.
Typically, probate involves a great deal of paperwork and costly court appearances by lawyers. The lawyers and court fees are paid from estate property, which would otherwise go to the people who inherit the deceased person's property.
A Will does not stop the estate from passing through probate court. Avoid Probate at all costs.
- proving in court that a deceased person's will is valid (usually a routine matter)
- identifying and inventorying the deceased person's property
- having the property appraised
- paying debts and taxes, and
- distributing the remaining property as the will (or state law, if there's no will) directs.
Typically, probate involves a great deal of paperwork and costly court appearances by lawyers. The lawyers and court fees are paid from estate property, which would otherwise go to the people who inherit the deceased person's property.
A Will does not stop the estate from passing through probate court. Avoid Probate at all costs.
What are your next steps?
What are your next steps?
Get Started
Protecting your family and business needs to be priority one, today.
Your assets are precious. Protecting what you own and plan to acquire should be a top priority.
Your assets are precious. Protecting what you own and plan to acquire should be a top priority.
Correct Your Structure
Using the wrong entity structures will create multiple legal targets for frivolous suits.
API Law can analyze your current structure and harden your defenses.
API Law can analyze your current structure and harden your defenses.
Reduce Risk
Let API Law do what we do, that's reducing risk to your family and business.
Ask your paralegal conducting your interview what your next steps are with the firm.
Ask your paralegal conducting your interview what your next steps are with the firm.
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Mastering your business is only one part of successful planning.
Knowing how to pass on your wealth to future generations to is the culmination of a life’s work.
Knowing how to pass on your wealth to future generations to is the culmination of a life’s work.
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