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972-248-8080 DALLAS
713-830-2207 HOUSTON
512-691-4100 AUSTIN
a blue and orange check mark with the letter w on it as the Wilson Whitaker Rynell Logo

Protecting Assets as a Sole Proprietor or Single-Member LLC

Chelsea Lankford • June 25, 2024

Essential Asset Protection Strategies for Sole Proprietors and Single-Member LLCs

As a business owner, you want to protect your personal assets for retirement and personal living. Protecting those personal assets is essential to ensuring your financial security and long-term success in life. Whether you operate as a sole proprietor or a single-member LLC, understanding the differences in how liability affects what you do is crucial to asset protection. This blog provides insights into the strategies you can implement to safeguard your personal and business assets now and in the future.


Personal Liability in Sole Proprietorships: Mitigating Risks to Protect Your Assets


A sole proprietorship is the simplest form of business ownership, but it comes with significant risks for the uninformed. In a sole proprietorship, the owner and the business are legally indistinguishable and, for all practical purposes, seen as one person. This joinder of liability exposes you to personal liability for all business debts and obligations of the sole proprietorship, meaning that in the event of a lawsuit, your personal assets, like your investment home, non-401K or Roth savings, and your tools of the trade, are vulnerable to being attached or liquidated in a lawsuit.


Strategies to Safeguard Your Assets In A Sole Proprietorship:


  • Obtain Adequate Insurance:

We recommend securing comprehensive business insurance to limit your financial exposure to third parties. Coverage should include general liability, professional liability, and property insurance. This not only helps cover legal costs and potential judgments but also significantly reduces the risk to your personal assets.

  • Separate Personal and Business Finances:

While not legally required in a sole proprietorship, separating your personal and business finances can enhance financial management and provide a clearer view of your business’s financial standing versus your personal finances. This separation helps in maintaining clear financial records and can be advantageous during tax audits, tax reviews, business audits, and financial reviews.

  • Use Contracts Wisely:

Crafting clear and detailed contracts is essential to limiting your exposure to client-related damages. These contracts should accurately define the terms, responsibilities, and liabilities of all parties involved. We recommend including clear warranties, return/exchange policies, and appropriate indemnity clauses, as these require the other party to compensate you for any losses or damages that may occur, further protecting your financial interests


By implementing these strategies, sole proprietors can mitigate the risks associated with personal liability, thereby protecting both personal and business assets. Be proactive by having all your customers sign contracts; this approach not only enhances legal protection for your assets but also fosters a stable foundation for business growth.


Single-Member LLC: Enhanced Protection

A single-member LLC provides a significant advantage in asset protection over a sole proprietorship by creating a legal separation between your personal and business assets. Here's why choosing an LLC might be the right decision for your business:


Limited Liability Protection For LLC

As an LLC owner (member), your personal assets are generally protected from business debts and liabilities. This is one of the most significant advantages of forming a Limited Liability Company (LLC). In the event that your business faces financial difficulties or legal challenges, creditors can pursue the assets owned by the LLC, but not your personal assets, such as your home, personal bank accounts, or other personal property.


How To Maintain the LLC’s Limited Liability Protection Shield

To ensure your single-member LLC continues to protect your personal assets, it’s essential to follow certain practices:

Adhere to Corporate Formalities:

  • Even as a single-member LLC, it’s crucial to maintain corporate formalities. This includes:
  • Holding Regular Meetings: Schedule and document meetings, even if only with yourself.
  • Keeping Detailed Records: Maintain meticulous records of financial transactions and meeting minutes.
  • Timely Filing: File required annual reports and fees with the Texas Secretary of State on time.
  • Avoid Personal Guarantees:

Where possible, avoid personally guaranteeing business debts or obligations. This keeps your personal assets insulated from business liabilities. Always sign contracts and other legal documents in the name of the LLC, not your personal name. This practice makes it clear that the LLC, not you personally, is responsible for the obligations. For example, when you sign an agreement for your LLC, your signature should denote your title: "John Doe, President." Putting your title reinforces the separation between you and your LLC, but simply putting your name without your company title may imply personal liability.

  • Properly Capitalize the LLC:

Ensure the LLC has sufficient capital to operate and cover its liabilities. Underfunded LLCs are more likely to face veil-piercing claims.  Courts can sometimes "pierce the corporate veil" if they determine that the LLC was not operated as a separate entity. This can happen if you commingle personal and business funds, fail to follow LLC formalities, or commit fraud or illegal acts. In such cases, you could be held personally liable for business debts. Further, obtain adequate insurance coverage for your LLC to protect against potential liabilities. This includes general liability insurance, professional liability insurance, and any other relevant policies for your industry

  • Conduct Business Ethically and Legally:

Adhere to ethical and legal standards in all business dealings to avoid accusations of fraud or illegal activity, which can lead to personal liability. Keep accurate and up-to-date financial records for your LLC. This includes tracking all income, expenses, assets, and liabilities. As for financial statements, regularly prepare and review them to monitor the setup and financial health of your LLC. You need to have a good lawyer and accountant watching what you do and helping guide you when and where necessary.

  • Comply With State and Local Laws

Obtaining and maintaining all necessary local and state business licenses and permits required for your LLC’s operations is important to remain legally viable. Compliance with local regulations not only helps preserve your LLC’s good standing but also ensures that your business can operate without legal interruptions. Fines, penalties, and potential legal issues are all evidence that your company is being run inappropriately.


Why a Single-Member LLC is a Smart Choice


Switching from a sole proprietorship to a single-member LLC (Limited Liability Company) offers substantial benefits, making it a smart choice for many entrepreneurs. Besides liability protection (already discussed above), there are several other key advantages to operating as an LLC:

  • Tax Advantages

Pass-Through Taxation: A single-member LLC is typically treated as a disregarded entity for tax purposes, meaning the business income is reported on the owner's personal tax return, avoiding the double taxation faced by corporations. Alternatively, the LLC can elect to be taxed as an S-corporation, which can offer additional tax benefits under certain circumstances.

  • Increased Credibility

Professional Image: Forming an LLC can enhance your business's credibility and professionalism. Customers, suppliers, and partners often perceive an LLC as a more established and trustworthy entity compared to a sole proprietorship.

  • Simplified Management

Simple Organizational Structure: A single-member LLC allows for straightforward management without the need for complex corporate structures. You retain complete control over decision-making and business operations.

  • Scalability

Attracting Investors and Financing: An LLC structure can make it easier to attract investors and secure financing. Investors are often more comfortable investing in a business structure that limits their liability. Additionally, banks and financial institutions might view an LLC more favorably when considering loan applications.

  • Perpetual Existence

Continuity of Business: Unlike a sole proprietorship, which dissolves upon the owner’s death or decision to stop the business, an LLC can continue to exist even if the owner passes away or exits the business. This continuity can be crucial for long-term planning and stability.

  • Customizable Ownership Structure

Flexibility in Ownership: While starting as a single-member LLC, the structure allows for easy addition of new members (owners) without significantly altering the business's legal structure. This flexibility is beneficial if you plan to expand your business or bring in partners in the future.

  • Privacy Protection

Anonymity: In some states, LLCs offer the option to remain anonymous, helping to protect your personal privacy. This is particularly advantageous for individuals who prefer to keep their personal information separate from their business activities.

  • Legal Recognition

State and Federal Recognition: An LLC is a recognized legal entity in all states, providing a consistent legal framework across state lines. This recognition can simplify interstate business activities and expansion plans.

Comparing a Sole Proprietorship to a LLC

A blue and orange table comparing a sole proprietorship to a LLC

Protecting LLCs and Sole Proprietorships | Wilson Legal Group

At Wilson Legal Group, our business attorneys understand the challenges and opportunities that come with managing, operating and maintaining a Limited Liability Company (LLC) or a sole proprietorship. Whether you're a starting entrepreneur or an established business owner, ensuring the legal protection of your business and personal assets is import aspect of running a successful business.


Why Choose Wilson Legal Group?

Our team of experienced business attorneys specializes in LCC and Sole Proprietorships formation, providing tailored advice and solutions for LLCs and sole proprietorships. We take the time to understand your unique business assets and how to protect those assets. Our personalized approach and client communications ensures that you receive the most relevant and effective legal advice on you LLC and Sole Proprietorship.


Wilson Whitaker Rynell assists clients in Dallas, Houston, Austin, and the rest of Texas in helping protect the assets of sole proprietorships and limited liability companies. We have successfully helped clients in Plano, Frisco, Addison, Richardson, Fort Worth, Irving, Carrollton, Taylor, Dallas County, Denton County, Collin County.


Contact Us or Call 972-248-8080 for a Free Consultation!


A person is holding a cell phone in front of a book titled artificial intelligence
By John Wilson February 19, 2025
Copyright and Translated Content: Who Owns the Creative Rights? Understanding Copyright Law and Translation Copyright law protects creative work and bestows sole authority over the work upon the creators. For example, the owner of the work of a novel has the right over the work under the concept of the right under the copyright. Courts have found that “the degree of protection afforded by the copyright is measured by what is actually copyrightable in the publication and not by the entire publication.” See, e.g., Dorsey v. Old Sur. Life Ins. Co., 98 F.2d 872, 873 (10th Cir. 1938) (emphasis added). For translations, the situation is not very clear. Translations involve creative judgments over word translation and not the translation of mere words. Hence the knowledge about the applicability of the concept of the right over the work is essential for establishing the right over the work. For example, a Court in the Northern District of California stated that: “ the determinative question is whether Plaintiff holds a valid copyright. ” Signo Trading Intern. Ltd. v. Gordon, 535 F. Supp. 362, 363 (N.D. Cal. 1981). The Signo Trading Court dismissed Plaintiff’s infringement claims because plaintiff did not have a valid copyright as a matter of law in the translations and transliterations at issue because they lacked the “requisite originality.” Id. at 365. Can Translation Be Considered a Creative Process? The Practice of Translating Translation goes beyond the replacement of one word by the equivalent word from the source text. Translating literary work, poetry, and fiction with deeper meanings beyond the surface text is a complex, artistic process. Translating books like The Iliad, for instance, requires the practice of artistic translation to translate the emotions, thoughts, and the culture correctly. Technical Translations and Legal Translations Conversely, technical writing and texts for the law need less creativity and instead value correctness over all else. These writing forms require strict adherence to the original sense, leaving very little room for artistic interpretation. Translations for these writing forms thus typically involve less creative contribution and less potential for the work being protected by copyright. Why Is Creativity Important for Translations for Copyright? Originality when translating For a work to be subject to copyright, some creativity, however slight, is essential. Even when the translation is taken from the work, the translation also includes some creative work by the translator. This creativity can make the translation subject to copyright. A derivative work must “recast, transform[], or adapt[]” a preexisting work and “consist[] of editorial revisions, annotations, elaborations, or other modifications which, as a whole, represent an original work of authorship.” Id. In other words, it must change or alter the pre-existing work’s content and must itself be an original work of authorship. The Supreme Court stated that “ [t]he sine qua non of copyright is originality ” and that “ [t]o qualify for copyright protection, a work must be original to the author. ” Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., Inc., 499 U.S. 340, 361 (1991) at 345. “Original, as the term is used in copyright, means only that the work was independently created by the author (as opposed to copied from other works), and that it possesses at least some minimal degree of creativity.” Id. (citing 1 M. Nimmer & D. Nimmer, Copyright §§ 2.01[A], [B] (1990)). In granting a Rule 12 motion to dismiss, the Signo Trading Court held that: " It is inconceivable that anyone could copyright a single word or a commonly used short phrase, in any language. It is also inconceivable that a valid copyright could be obtained for a phonetic spelling, using standard Roman letters, of such words or phrases. Although lists of words and translations of larger works may be copyrightable, Plaintiff cannot claim credit for any of the elements which make those things copyrightable. For these reasons, Plaintiff does not hold a valid copyright on the translations or transliterations ... " Signo Trading, 535 F. Supp. at 365. The Problem of the Derivative Work However, translations are generally "derivative works" - derived from the work of another. Because of this, the owner or author of the work is generally required to agree to the translation. Translations made illegally can be held under the classification of copyright violations, even when the translator has added creative elements. Who Has the Right over the Translated Work? Employer-Commissioned Translations Ownership of the copyright for the translation work varies. If the translation is commissioned by the owner of the original work, the owner will retain the right. Even when the translator adds creativity by passing over the original emotions and thoughts, the owner will not necessarily lose the right over the translation work. In some circumstances, the translation work can be accredited by the translator without them holding the right over the work. Independent Translations If a translation is performed independently by the translator, the translator can even be identified as the co-author of the translation. Nevertheless, the author typically has the underlying copyright, restricting the translator’s right over the work. Creative Translations from the Public Domain In certain cases, a translation may be creative enough to warrant its own copyright. For example, a translator adapting a classic work or a book in the public domain into modern language may introduce enough originality to qualify for copyright protection. However, direct, word-for-word translations are typically not considered original enough to receive new copyright protection. What About Machine Translations? The Human Creativity Copyright Requirement Machine-generated translations, including those produced by platforms like OpenAI , operate through advanced algorithms that replicate language patterns rather than capture the human touch. Unlike translations crafted by human translators who often infuse cultural insight and genuine emotion into the work, OpenAI's output is rooted in statistical patterns and data. Consequently, while these translations are impressively efficient and accurate, they typically fall short of the originality required for copyright protection. This distinction underscores the human creativity requirement needed to secure a valid copyright . Ultimately, although machine-generated translations serve as powerful tools, they do not offer the same legal and creative protections as those provided by human translators. The Bottom Line: Navigating Copyright in Translations Translations occupy the middle ground under the law of the copyright. Albeit the right of the original author generally has the right under the copyright, the right under the copyright can also be claimed by the translator provided the translation is creative enough. Central considerations here include the creativity the translator has added, the nature of the work being translated, and whether the work is under the public domain. These considerations establish the right of the owner under the copyright for the translation. Why Wilson Whitaker Rynell for Your Copyright Work? At Wilson Whitaker Rynell, our professional lawyers specialize in the practice of copyright law and copyright litigation , including the complex subject matter of translation work. We can provide you with advice about the ownership of your work under the provisions of the copyright, and protect your creative property. If you are the author, the publisher, or the translator, you can rely upon the advice from our firm. Copyright Translation FAQS
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Female Divorce Attorneys in the Dallas-Fort Worth Area In many instances, divorce cases are challenging and emotionally taxing experiences. For this reason, it’s common for people to prefer working with an attorney of the same gender because they feel as though the attorney can empathize and understand their situation more. At the end of the day, the gender of your attorney may not affect the outcome of your case, but it’s important to feel as comfortable as possible while navigating through the process. At Wilson Whitaker Rynell, our experienced female divorce attorneys offer compassionate and empathetic approaches while they develop a comprehensive legal strategy to represent you. Why Should You Choose a Female Divorce Lawyer? There are many reasons why hiring a female divorce attorney can help you throughout your divorce. For one, they often have experience working on issues that disproportionately affect women in divorce such as spousal support (alimony), child custody disputes, and asset division. Additionally, female divorce lawyers offer a unique level of empathy, understanding, and communication. As a result, many clients feel that they are more approachable and compassionate, which is beneficial when dealing with the emotional turmoil of the process. More importantly, female divorce attorneys are more familiar with how the court treats women in divorce cases and use this knowledge to strategically protect their clients’ interests, whether male or female. Why Our Female Divorce Attorneys May be Right for You At Wilson Whitaker Rynell, our female divorce attorneys are skilled, knowledgeable professionals, they also have many years of experience in handling complex divorce cases. Whether it’s issues surrounding custody of children, alimony, or asset division, our female divorce lawyers ensure each client receives high-quality legal advice. Our firm’s female divorce attorneys provide the highest level of personal attention, ensuring that each client’s unique needs and concerns are addressed through every step. Unique Challenges Women Face in Family Law Disputes in Texas Family law disputes can be emotionally charged and legally complex, especially for women navigating the process in Texas. Women often encounter unique challenges due to their roles in the marriage and family dynamic, particularly when it comes to child custody, child support, and the division of marital assets. Child Custody Challenges In many marriages, women take on the primary caregiving role for their children. However, when it comes to custody decisions, courts in Texas prioritize the best interests of the child over parental gender. While this often works in favor of mothers, women may still face hurdles in proving they are better suited to provide the stable environment the child needs, especially if their ex-spouse disputes custody. Factors such as work schedules, living arrangements, and financial stability can come under scrutiny. Child Support Issues While Texas law allows women to seek child support, collecting these payments can sometimes prove difficult. Women awarded child support may find themselves dealing with ex-spouses who delay payments, make partial payments, or refuse to pay altogether. Enforcing child support orders often requires legal intervention, which can add to the emotional and financial strain. Division of Marital Assets In Texas, a community property state, marital assets are typically divided equitably during divorce. Women who are awarded assets such as the family home may face challenges related to maintaining the property, refinancing a mortgage, or covering associated expenses. Additionally, women who sacrificed their careers to support their spouses or raise children may feel disadvantaged during the division of assets if their earning potential is limited compared to their ex-spouse. How Your Divorce Attorney Will Support You Each divorce case is unique, and having an experienced attorney standing by you is vital. Whether you’re dividing assets, negotiating child custody, or managing other complex legal issues, the female divorce attorneys at Wilson Whitaker Rynell are here to protect the interests of you and your family. Our attorneys will take the time to understand your unique circumstances and empower you to make informed decisions that support your career, family and future. When you choose a female divorce attorney from Wilson Whitaker Rynell, you can trust that they will: Prioritize your family’s best interests. Negotiate with integrity, ensuring fairness and transparency. Clearly explain all your options and their potential outcomes. Help you create the future you want by offering trusted legal advice. Use efficient methods to minimize unnecessary costs and keep the process manageable. Navigating family law disputes requires a thorough understanding of Texas family law and strong advocacy. Women facing divorce or other family law issues are encouraged to seek an experienced family law attorney who can provide personalized guidance. A skilled lawyer can help craft a strategy that protects their rights and ensures a fair resolution. This includes representing their interests in court, negotiating settlements, and helping enforce orders such as child support or spousal maintenance.
A man riding a horse with a bull behind him
By John Wilson January 23, 2025
Understanding Writs of Execution in Texas: A Layperson’s Guide If a court determines that someone owes money to another party, the debtor—referred to as the "judgment debtor"—typically has 30 days to pay off the debt. If the debt remains unpaid after this time, the creditor, or "judgment creditor," can take legal action to enforce the payment through a Writ of Execution . This legal process, governed by Texas law, enables creditors to collect what they are owed by seizing and selling the debtor’s non-exempt assets. What Is a Writ of Execution? Under Texas Rules of Civil Procedure 629 , a Writ of Execution is a court order that authorizes a sheriff or constable to seize the debtor’s property to satisfy the debt. This writ is an essential tool for creditors when voluntary repayment has not occurred. Once the writ is issued, it is handed over to a county constable or sheriff, who is required to act “without delay” in collecting the debtor’s real and personal property. The seized property is then sold, and the proceeds are used to pay off the debt. If multiple writs are filed against the same debtor, the assets are distributed in the order the writs were received. What Property Can Be Seized Under a Writ of Execution? Texas law is very specific about which types of property can and cannot be seized to satisfy a judgment. Exempt Property Certain assets are protected from seizure under Texas Property Code § 41.001. These include: The debtor’s homestead (primary residence) Wages earned from employment Professionally prescribed health aids Workers’ compensation benefits College savings plans Some insurance benefits Personal property valued up to $50,000 for individuals and $100,000 for families Unique to Texas, the law also protects items like family Bibles, two firearms, pets, and for rural residents, livestock (e.g., 12 head of cattle and 120 fowl). This extensive list reflects Texas's cultural heritage and values. Non-Exempt Property Assets that are generally not exempt include: Vacation homes Timeshares Pleasure boats Airplanes Jewelry exceeding certain value thresholds The specific procedures for seizing different types of property are detailed in Texas Rules of Civil Procedure 639 . Can a Writ of Execution Be Avoided? Judgment debtors have a few options to avoid the execution of a writ: Filing a Supersedeas Bond A supersedeas bond can temporarily halt enforcement of the writ. This bond, filed with the county clerk or justice of the peace, preserves the status quo while the debtor seeks further legal remedies. This option is governed by Texas Rules of Civil Procedure 634 . Challenging the Execution Debtors can file a claim for wrongful execution in situations such as: The debt has already been paid Exempt property is being seized The levy is excessive Additionally, courts take extra care to protect property classified as a homestead under Texas Property Code § 41.002(c) . When only one spouse is responsible for the debt, Texas Family Code § 3.202(a) and related provisions provide guidance on levying against community or separate property. The Role of County Officials in Executing the Writ Once the writ is issued, its enforcement falls on county officials, typically a sheriff or constable. These officials must act in accordance with Civ. Prac. & Rem. Code § 34.072 , which requires them to execute the writ and report back to the court. They must: Give proper notice of the sale of seized property Ensure the proceeds are appropriately delivered to the creditor Avoid overstepping legal boundaries, such as seizing exempt property Failing to execute the writ properly can result in serious consequences, where a sheriff’s refusal to levy on a property initially listed as exempt (but later deemed abandoned) led to court action and damages awarded to the creditor. Preventing Fraudulent Transfers One challenge creditors face is when debtors attempt to hide or transfer assets to avoid collection. To address this, Texas follows the Uniform Fraudulent Transfer Act under Tex. Bus. & Comm. Code § 24.001 et seq .. This act provides legal remedies to creditors when a debtor’s transfer of assets is deemed fraudulent. Effect of a Defendant's Death on Writs of Execution Under Civ. Prac. & Rem. Code § 34.072 , the death of a defendant after a writ of execution is issued halts execution proceedings. However, any lien acquired from the writ's levy is still enforceable by the county court when paying off the deceased's debts. Why Proper Execution Of The Writ Is Crucial The rules for filing and serving a Writ of Execution are strict and detailed. Missteps, such as filing the writ in the wrong county, failing to serve the proper parties, or missing key deadlines, can lead to delays or even render the writ ineffective. Both creditors and debtors must ensure compliance with these rules to avoid unnecessary complications. For creditors, failure to properly enforce the writ could mean losing the opportunity to collect on a judgment. For debtors, not responding appropriately to a writ could result in the loss of valuable assets, even those that might have been exempt.
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The Wilson Legal Group are Dallas attorneys that specializes in Patents, Trademarks, Copyrights, Trade Secrets, Complex Litigation, Business/Corporate Law, Family Law and Real Estate Law. At the Wilson Legal Group, our clients are our focus. Our philosophy is simple and straight-forward: Understand our clients' needs, hopes, and interests in order to help them flourish. Our staff strives to build strong relationships with our clients in order to appreciate their best interests and help them achieve their goals.

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