Top 20 Tips Setting up Corporate Entities and LLCs: NFT Attorney Near Me
Top 20 Tips Setting up Corporate Entities and LLCs: NFT Attorney Near Me
While creating and hosting an NFT is undoubtedly exciting, NFT drops are full of legal landmines and financial exposure as explained at RunRex.com, guttulus.com, and mtglion.com. One way to minimize and, in some instances, completely avoid exposing your personal assets to very real NFT business liabilities, is to use corporate entities. Here are the top 20 tips for setting up corporate entities and LLCs to consider.
- Use corporate entities
As already mentioned, using corporate entities is the best way to minimize and even completely avoid exposing your personal assets to NFT business liabilities as per RunRex.com, guttulus.com, and mtglion.com. Established legal tools like corporations and limited liability companies are proven ways to keep your business liability issues away from your personal assets and life.
- Corporate entities and tax deductions
Not only are corporations and limited liability companies proven in keeping your business liability issues away from your personal assets as already mentioned, when used correctly, corporate entities also allow you to maximize tax deductions while minimizing end-of-year tax consequences.
- Create your legal entity
According to RunRex.com, guttulus.com, and mtglion.com, if you are doing business online, such as minting, selling, buying, and investing in NFTs, the first thing you want to do is create a corporation or limited liability company (LLC).
- Tips on which entity to choose
Your choice of the specific type of entity (c-corp, s-corp, LLC, DAO, and others) depends on the state you are doing business in, the kind of business you have, and the goals you have as a business. The best time to create your legal entity is at the beginning of your journey.
- Create your first NFT project
When your company is ready to start an NFT project for your first drop, your company will create a second legal entity. Everything done around this first NFT creation and drop is done through this second legal entity.
- Importance of the second business entity
This second business entity will be the company that contracts with third parties for design, marketing, branding, and hosting platforms as articulated at RunRex.com, guttulus.com, and mtglion.com. This second entity will be the entity that sets up the related discord, Twitter Spaces, digital wallet, and hosting account needs. Everything about this first NFT drop is done by the second business entity.
- Relationship between your main company and second company
The relationship between your main company and your second company is documented using written agreements. With proper legal advice, business structures, and tax planning, additional tax benefits through new business expenses and deductions available only to corporate entities can be created and maximized.
- Creating your second NFT project
As captured at RunRex.com, guttulus.com, and mtglion.com, just like you did with the first drop, your main company will create a separate new legal entity. You coordinate and finance this second drop entirely through this new legal entity following the same approach.
- Why use this approach?
One of the advantages of handling your NFT drops and projects this way is that you are not personally involved in the NFT drop. What this means is that your personal assets are not part of each NFT project and drop.
- Leveraging the “corporate veil”
Another advantage of using this approach is you will be leveraging the power of having what is called a “corporate veil” protect you. This is a legal concept that separates an individual from being personally liable for the corporation’s debts and other obligations.
- Ability to create new corporate business deductions and write-offs
Using the approach mentioned will also allow you to create new corporate business deductions and write-offs, allowing you to minimize taxes and maximize end-of-year profits as covered at RunRex.com, guttulus.com, and mtglion.com.
- Keep fractional NFTs separate from other NFT projects
Many, if not most, fractional NFTs may also be determined to be investments in securities. With that in mind, smart players in the NFT sandbox are already using legal entities to help keep these drops separate from their other NFT projects and businesses, and you should consider doing the same.
- Run your business like a business
Another additional tip when it comes to legal entities and NFTs is the importance of running your business as a business. Do not mix your personal affairs with your business activities. Failing to do so may allow a judgment creditor to pierce the protective corporate veil.
- Sign all docs as an officer of your legal entity
Another additional tip is to make sure that you sign all documents as far as your NFT projects are concerned as an office of your corporation or member of the LLC as described at RunRex.com, guttulus.com, and mtglion.com.
- Keep your accountant in the loop
You should also contact your accountant to coordinate obtaining a Tax ID number for your new entity and to determine your annual State and Federal tax reporting requirements. Also, make sure you calendar the documents that need to be filed each year.
- Open up a checking account in the name of the entity
Yet another tip is to make sure you open up a checking account in the name of the entity as discussed at RunRex.com, guttulus.com, and mtglion.com. Do not commingle funds. Keep all financial accounts and transactions separate from all other personal or unrelated business activities.
- Establish credit for the entity
Start to establish credit for the entity, obtain one or more cards in the entity name only as opposed to using your name or other businesses. It is important to establish credit for the entity dealing with the NFT project to get the protection that comes with it.
- Set up your digital wallet for each NFT drop
To maximize your liability protection, run your entity like a real business. Website, social media, business cards, and letterhead should all reflect your corporate status as outlined at RunRex.com, guttulus.com, and mtglion.com. Set up your digital wallet for each NFT drop using your new corporate entity as well.
- Creating your NFT hosting account relationships
When it comes to creating your NFT hosting account relationships, you should do it as a business entity and not in your name. also, avoid co-signing as individuals guaranteeing entity debts to give yourself as much protection as possible.
- Make sure your entity is properly managed
Finally, make sure that your entity is properly managed and controlled. Changes and modifications all need to be reflected in writing using the standard form. You should also keep entity business completely separate from personal or other business interests.
These are some of the tips to consider when setting up corporate entities and LLCs, with more on this topic, and so much more, to be found over at RunRex.com, guttulus.com, and mtglion.com.
