Structuring

Business planning often deals with how two or more persons do business together. It is amazing how often people with completely different financial situations, different skill sets, different motivations, different ages, different risk profiles, etc. enter into business together in such a way that they all get the same benefits (and responsibilities, etc.).

However, some of the most successful structures I have been part of are custom arrangements where, for instance, more of the tax benefits might go to one person, more of the cash flow to another, increases in value to one or the other, liability protection to one, personal liability (e.g., for construction loans) to another, confidentiality to one person while the other is "out front", passive income to one person while the other has active income, etc., etc., etc.

The same considerations also apply to the one-man operation. The active business (where most of the risk usually is) might be treated very differently (and be in a different entity) than the investments acquired as a result of that business success.

Often these structures are inter-disciplinary – that is, they involve corporations and/or LLC’s, and/or trusts and/or partnerships, etc. In these situations the principal parties have a somewhat greater responsibility to understand the various kinds of entities and how they interact.  But doing it this way makes it a lot more difficult for outsiders, even (sometimes especially) attorneys, etc. to perceive the total picture of who owns what, etc. This is often a significant consideration when we are setting up a company's internal operating systems and procedures.