Tax Guru-Ker$tetter Letter
Wednesday, December 18, 2002
Choosing A Corporate Name
A big mistakes people make when setting up a new corporation is simply adding an Inc., Ltd., or Corp after their name when choosing a name for the new corporation.
Besides the very lucrative tax savings opportunities available in a corporation, it can increase your privacy and lessen the potential for frivolous lawsuits.
It is no secret that people will sue anyone for anything if they think they can get some money out of it. Ambulance chasing attorneys, when deciding whether or not to take on a case don't care one iota whether or not the case is justified. What they are concerned with is how deep your pockets are. They will do a search to see what assets you own. If your name is the same as your corporation's, it will be impossible to prevent the vultures from identifying everything owned by you personally and through the corp. If the names are different, there is less likelihood that a search will link ownership of assets. If there doesn't appear to be a lot of attachable assets, the normal ambulance chaser will pass on accepting the case.
The best corporate names are those that give away no hint of who owns them. There is no requirement that the name of a corporation identify the owner or even what it does. I'm a big fan of using as generic and vague a name as possible, such as initials or a made up name. Several clients have fabricated great corporate names from parts of their kids' or grandkids' names.
Besides protecting against nuisance lawsuits, using a vague corporate name allows a level of privacy that would not otherwise be available. Not everyone wants all of their transactions published in the paper for the whole world to see.