Why I Recommend Multiple Entities for Business

May 16, 2023

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Part of the reason that the Titanic sunk so quickly and so many lives were lost, was that the compartments that make up the hull of the ship were not completely sealed from one another. When the iceberg tore open the first three compartments, water flooded in and filled those then began filling the rest of the ship. If those compartments had been sealed from the others, the ship may have been able to stay afloat longer, proving safety for the passengers, at least until help could arrive, saving many lives that were lost.

What does this have to do with multiple entities?

As our businesses grow, and we acquire more assets, it becomes ever more important to compartmentalize these assets. I will give you an example of a type of business that is very prevalent in Laredo and along the border. The trucking industry. The company usually will begin with a few tractors, and maybe some trailers. If the business is well managed, sales increase and more vehicles are purchased. Then having a terminal or yard of your own in order to build equity and eliminate rent going out the door every month.

With this example in mind, let’s remember that the U.S. is the most litigious country in the world. Trucking is a high risk industry. Let’s say one of your drivers is negligent in his driving your truck, resulting in the death of a family. Your insurance company will provide a defense and may offer to pay the full policy limits to settle the case. But it might not be enough. If you began your business by forming a business entity like an LLC or a corporation, your personal assets will be protected, but all of the assets of the entity will be on the line to pay any shortfall the insurance does not cover. That means that all company vehicles (or the equity you have in them) and company property, can be sold to pay for the judgement. This can be a devastating result, even if your personal assets are not affected. Your way of making a living has been taken away and you have to start over from scratch.

Is there a way to reduce the risk? Yes, there is.

Again, using the initial example, I will show you that using multiple entities will provide protection, allowing you to continue moving forward with your business, without the total loss and devastation. As the business began to grow and acquire additional vehicles and equipment, you formed a new company to purchase the equipment, own it and lease it to your trucking company. In that lease, you specify that the trucking company is responsible for all maintenance and damages. Your trucking company now pays your leasing company to use the equipment, it does not own any vehicles. When you purchase your terminal or yard, you form yet another Company that rents the property to the trucking company. If there is an accident with your driver, they can only reach the assets of the trucking company. The trucking company does not own many hard assets, just some computers, desks, and other office equipment (if these things are not also leased). The vehicles (which are what make money for you) are then leased to a new company and will continue to produce income for you. The property is not exposed because it is in a completely separate company and a fair rent is paid.

This may sound too good to be true. It is not too good to be true, but it is more work to maintain the separateness of these companies. For this to work, you need to not just create the companies, you must insure that you maintain contracts, like if you were dealing with a stranger. You must maintain your entity minute books documenting all of the intercompany agreements and transactions so you can defend the separateness of the companies. It is through the regular maintenance of the intercompany transactions and records that you insulate each entity from the other.

Unlike the Titanic, by forming these compartments in your businesses, and maintaining the separateness, you can rest assured that your ship will not be easily sunk and that you will be able to make your way to continued success.

If you are interested in forming a new entity or to review your business structure, contact me at 956-791-5422 or email at info@dickersonlaw.com to schedule an appointment for a review of your business structure.

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Molding Your Financial Future in 2025

January 17, 2025

As we step into the new year, I find myself reflecting on the countless entrepreneurs, professionals, and business owners I’ve worked with throughout my career. Helping clients mold a shield of protection around their assets has been one of the most rewarding aspects of my practice. Time and time again, I’ve witnessed that success isn’t reserved for geniuses, nor does it require a fancy degree. The secret lies in action, strategy, and discipline—traits anyone can cultivate to achieve and maintain wealth. The Myth of Instant Wealth How often have we heard someone say, “When I win the lottery, I’ll finally be set”? It’s a common refrain, but let’s examine the reality. Imagine winning $10 million in the lottery. After choosing the lump sum option and paying taxes, you might walk away with only a fraction of that—perhaps $2 million. Without a solid financial plan, it’s no surprise that many lottery winners end up broke within a few years. True wealth isn’t about luck or flashy possessions. It’s about what you do with your resources and how you protect them. If you look around your community, the truly wealthy aren’t necessarily the ones with the biggest houses or newest cars. They’re often the ones who’ve taken calculated risks, lived within their means, and built unglamorous but steady businesses. These individuals mold the clay they’re given, creating shields of protection around their assets that ensure their financial stability for generations. The Trap of Looking Rich We’ve all seen it—the big house, luxury car, and designer wardrobe. But appearances can be deceiving. Many who look wealthy are drowning in debt, spending more than they earn, and chasing the illusion of success. As my wife lovingly calls it, Dickersonism #7: “Looking rich does not MAKE you rich.” True wealth is built on a foundation of solid, income-generating assets, not consumables. Falling into the trap of “keeping up with the Joneses” (or Kardashians) often leads to financial instability and missed opportunities to create lasting wealth. The Cost of Inaction One of the greatest obstacles to wealth and protection is inaction. Henry Ford famously said, “If you think you can, you can. If you think you can’t, you can’t. Either way, you’re right.” Inaction is the path of least resistance, but it’s also the path to missed opportunities and unfulfilled potential. Some hesitate out of fear or over-analysis, a condition I call “analysis paralysis.” It’s easy to get caught up in what could go wrong, but this mindset keeps you stagnant. Every successful person I’ve worked with has one thing in common: they took action. They understood the risks but focused on the rewards, moving forward despite uncertainty. Setting Your Course for 2025 If you haven’t taken steps to mold your financial future, now is the time. Ask yourself: Where do you want to be a year from now? In five years? In ten? Define your goals and begin building the path to reach them. Just as importantly, protect what you’ve built. Not having a plan to shield your assets is like running exposed electrical wiring—sooner or later, you’ll face unnecessary risks. A board-certified estate planning attorney can help you design a plan to safeguard your wealth, ensuring it stays secure for you and your loved ones. Take Control of Your Future Success doesn’t just happen—it’s molded. Listen to trusted advisors, but remember that the final decisions are yours to make. Clarify your vision, take bold steps, and build the life you’ve always dreamed of. At The J.M. Dickerson Law Firm, we’re here to guide you every step of the way. Whether in person, by appointment, or via Zoom, we’re committed to helping you create a legacy of success and security. Contact us today, we can help! South Texas: 956-791-5422 Central Texas: 830-302-4577 Let’s make 2025 your year of action, growth, and protection.

Embracing the Holidays as a Time for Estate Planning

December 20, 2024

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Start the New Year Strong: Four Steps to Success

December 13, 2024

As the end of the year approaches, it’s easy to feel the weight of unfinished tasks and the hustle of the holiday season. Between wrapping up work projects, preparing for family gatherings, and making plans for the future, this time of year can feel overwhelming. But amidst the busyness lies a valuable opportunity—the chance to press reset and prepare for a fresh start. The New Year offers a clean slate, making it the perfect time to reflect, reorganize, and refocus your goals. By dedicating some time to the right activities now, you can set yourself up for success in the months ahead. Here are four key steps to help you start the New Year on solid footing. Step 1: Reflect on the Past Year As the calendar flips to a new year, many of us naturally find ourselves looking back at the previous 12 months. This is the perfect moment to assess your professional and personal accomplishments, challenges, and growth. Ask yourself: • What were my biggest successes this year? • What goals did I miss, and why? • What strategies or habits worked well for me? • Where can I improve moving forward? Reflection isn’t just about identifying wins and losses; it’s about understanding the “why” behind them. Seek feedback from colleagues, mentors, or trusted peers to gain new perspectives. The more honest and thorough your evaluation, the more valuable it will be as a foundation for future planning. Step 2: Create a Game Plan for the Year Ahead Reflection is only the beginning. To make real progress, you need a clear and actionable plan for the year ahead. Start by defining your big-picture goal for the next 12 months. What’s the most important outcome you want to achieve? Once you have that, break it down into smaller, measurable objectives. For example, if your goal is to expand your business, your smaller objectives might include increasing marketing efforts, attending networking events, or launching a new service. Outline the steps needed to achieve each objective and set realistic timelines for completion. Revisit your goals regularly—at least quarterly—to ensure you’re staying on track or to adjust for any changes in your circumstances. Flexibility is key to maintaining momentum throughout the year. Step 3: Declutter Your Inbox An overflowing email inbox can be a constant source of low-grade stress. Ending the year with a streamlined and organized inbox can give you a fresh sense of control as you head into January. Here’s how to tackle it: • Respond immediately to any urgent or unresolved messages. • Delete emails that are no longer relevant. • Unsubscribe from newsletters or mailing lists you no longer find useful. • Create folders and filters to better organize incoming messages moving forward. To keep your inbox manageable, schedule regular cleanups throughout the year. Whether monthly or quarterly, these maintenance sessions will prevent clutter from building up again. Step 4: Knock Out Small Tasks The small, unfinished tasks lingering on your to-do list can be more draining than you realize. Use this time to cross off as many as possible before the New Year begins. • File paperwork that’s been piling up. • Respond to emails you’ve been avoiding. • Wrap up loose ends on ongoing projects. Completing these small but nagging tasks will give you a sense of accomplishment and free up your mental bandwidth for bigger goals in the New Year. Starting January with a clean slate will allow you to hit the ground running. Your Fresh Start A new year is a chance to realign your priorities, set meaningful goals, and approach your work with renewed focus. By reflecting on the past year, setting actionable goals, decluttering your space, and tying up loose ends, you’ll create the foundation for a successful year ahead. Whether you spread these steps out over a few weeks or tackle them all in one day, the most important thing is to commit to the process. A little effort now can make a big difference in how you start the year—and how you finish it. Here’s to making the most of your fresh start!