The best asset protection comes from entities formed in Delaware, Nevada, or Wyoming.
This is one of the biggest misunderstandings in asset protection. Unless you are doing business in these states, your entity is not going to receive any asset protection by forming in these states. You will pay more in state fees and tax return preparation fees.
An insurance policy covers you completely.
Insurance policies have deductibles and more importantly exclusions. The insurance policy contract is written up by the insurance attorneys to exclude many items. An insurance adjuster will decide if your claim is covered and should be paid. Insurance is an important part of asset protection, but only a partial solution.
I will save on taxes by forming a corporation or LLC.
Simply forming an entity does not allow you to deduct personal expenses or write off your lifestyle. However, some small businesses benefit from operating as an S corporation by decreasing the payroll taxes on the income of the owners. In addition, entities will allow you to save more for retirement in a tax deductible or tax deferred manner. C corporations can set up medical reimbursement plans and have other benefits that are not otherwise deductible.
An LLC or corporation will provide privacy or confidentiality.
In all but four states (DE, NM, NV, and WY), it is extremely difficult to achieve privacy or confidentiality with an LLC or corporation. Even in three of these states (excludes New Mexico) both a registered agent and an organizer must be made public. However, real estate can be held in a land trust anonymously.
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