Ecommerce business cash cow structure and asset protection - US Citizen owner

[caribbeancat]

First post, go easy on me... Apologies in advance for the length.

Over the last 3 years my ecom business has grown into the 8 figures. Run very lean and so last year (2020) I moved to Puerto Rico to establish residency as of Jan 1 2021. All this has been done by the book. Before anybody jumps in to scold me for asking random internet people for advice, I have 3 lawyers, 2 CPAs, and 1 consultant that I am trying to wrangle. The problem is I don't know what I don't know, and this forum seems to have the type of people who see things from a different angle, which I appreciate.

The Problem:
Distancing my personal assets from the business. My competitors are large multinationals and will not stand for me eating into their sales much longer, and I may have another 6-12 months before things get ugly. Better to be prepared than caught off guard. I have been warned by multiple people who walked this path before me that it will happen.

Current Situation:
Delaware LLC with a USA bank account intakes money from ecommerce stores via PayPal, Amazon, Stripe. Transfer pricing model allows me to bill away profits to a Puerto Rico consulting corp where it is then distributed as dividends to me at 0% tax as I am a resident. Of course can't take it all out of the US, but I'm fine with that and trying to do everything by the books. DE and PR corps own a mix of IP related to the business, all easily attached to my identity.

Proposed Solution Step 1:
The goal is to place a barrier between the online IP we operate and the products we sell and myself. It was suggested by my attorneys a Nevis trust be explored, but the process is somewhat daunting and I lose a lot of granular control. Also not sure I am comfortable transferring title of my real estate in Puerto Rico and the US to a Nevis trust. I may look at this as a step 2 if there are no better alternatives. It was also loosely suggested to integrate BVI as it would make things much easier to take on future investors or issue public securities, but I have no idea if that is true.

1. Move Delaware LLC to Wyoming for enhanced deterrent to frivolous lawsuits. Cash is held in the same bank account as prior.
2. Establish Nevis holding company which will then own the Wyoming LLC in whole, my name is removed.
3. Nevis holding company takes ownership of the Puerto Rico LLC, my name is removed.
4. IP trail therefore ends at the Nevis holding company including domain names and trademarks.
5. I own the Nevis holding company, but my ownership is not easily discoverable.

The problems I see with this are:

• My name WAS on all the public filings before the transfer to Nevis. Does this not defeat the purpose if I get sued in a US court? Even though they can't prove it's still me, they know it's still me. Could this be solved by getting a valuation and selling the IP and corps to the Nevis holding company at fair market value?
• I have a number of other operating entities around the world with my name on them. UAE, UK, etc... What is the eventual end game with these entities if they need to remain open as it relates to Nevis?

All thoughts and suggestions are welcome.

 

[Golden Fleece]

While the structures that you discuss are somewhat complex, the liability issue is very simple. In fact, if you have three lawyers it sounds as if you have two lawyers too many. I am not being flippant. Provided that you have not yet been sued and that you do not expect to get sued soon for something that you have actually done, a corporation almost always fully insulates you from liability. This is the general rule:

Corporations and limited liability companies, on the other hand, offer personal liability protection. The liability protection offered by these types of business entities helps ensure that a loss or incident that occurs in your business doesn’t result in exposure to your personal finances and assets.

Does Forming an LLC or Corporation Fully Protect You From Liability?

Forming an LLC or corporation or other limited liability entity will not protect you from every possible risk and liability out there.

cenkuslaw.com

The typical problems arise when (1) you try to form a corporation or some other entity to protect yourself after you have been sued or just before you expect to be sued (deemed a fraudulent conveyance) or (2) your adversary successfully pierces the corporate veil because you comingled personal and business funds and treated the business as your personal piggy bank. There are a few other issues, but these are the main ones.

If I were in your shoes, I would choose a Nevis IBC or LLC. It has the best asset protection legislation around. If you absolutely expect a lawsuit, it is absolutely worth creating a trust or foundation to further insulate your assets.

Cook Islands Foundation: Any thought of a corp service provider? And, any experience/thought about reputation?

Hi! Do you have any thought about what's a good corporate services provider of Cook Islands foundations? I recall asking some offshore incorporation service why they used to incorporate Cook Islands companies and they told me something like that Cook Islands had had a bad reputation and fallen...

www.offshorecorptalk.com

This corporate liability concept is so elemental that I suspect something else is going on that you did not disclose, misappropriated IP, etc. If you did nothing wrong, these corporate liability concepts are elemental. If you did something fraudulent, then it will be 100 times as difficult (as it should be).

 

[mebuq]

the simpler the set up the better I beleive. own an offshore company to exempt you from tax and own couple bank accounts