Planning Ahead With Your Online Business
Maybe it has nothing to do with my online business but I was on the phone today with TD Ameritrade. I can dream again now that I know my PATIENCE has paid off. My plan is to keep my activities connected (but separate) so I can form a support system that balances the over all efforts. Separate entities working together as an operating system of businesses.
When I walked away from the Stock Market years ago, I used to get these calls from brokers, “it’s time to get back into the market…” Maybe it was time for them to bleed their fees out of someone but not me!
Today, I was on the phone for the first time with a brokerage house in years. I had a handful of questions that I needed answers for so I can pull my plans together.
PROTECTING YOUR ASSETS
The reason for my call was so I could talk about transferring an account from a personal trading account to a business trading account. Apparently, you can’t do this directly but can transfer the funds from the personal account to the business account.
One of the most important things you need to do is work on protecting your assets. This can be in many forms such as insurance or entity structuring. When I was on the phone, I was looking at the aspect of entity structuring. If you have a business that is set up as a separate entity than yourself, you are providing another level of protection. (This does not include being a “Sole Proprietor”.)
When I bought my first home, my Insurance agent had me increase my coverage on my Auto Policy. (How is this related) That’s what I asked. He told me if I had an accident that wasn’t fully covered by my auto policy, the “injured party” could go after other assets. This is why you want higher insurance policies if you own other assets.
YOUR ONLINE BUSINESS
When I made the call this afternoon to TD Ameritrade, I was thinking about one thing. This was how I was going to fit my trading into the over all picture of my Online Business Structure.
The purpose of the entity structuring is to protect you from your business. (Does that sound right?) If your business is dangerous, why would you do it? It’s not. The problem is people are dangerous. Have you heard about the crabs in the bucket?
When the fishermen go out crabbing, they have to cover the bucket when they get their first crab. Once they catch more than one, they no longer need the cover. When one crab attempts to escape the bucket, the other ones will pull him back in.
People are not different. We see this all the time with our online businesses. When you start working on your business, your friends will try to pull you back into the bucket! They are envious although they will tell you they don’t want you to “get hurt”.
Your online business is like your home. You have to protect your home and protect your business. This may be thru entity structuring and/or insurance. There is a lot more to this than can be addressed here.
While on the phone, the employee of TD Ameritrade asked what kind of business account I was looking for. Among the list, he mentioned the sole proprietor but I dismissed this immediately because it affords you no personal protection. I told him it would either be a LLC (Limited Liability Corporation) or a C Corporation.
Now, it’s time to get an attorney on the phone to sort out the pros and cons of LLC’s versus C-Corporations!