So far we've talked about the accounts and also raised some questions about how to account for domains from a taxation perspective. Like all discussions of this nature you really need to get professional advice for your own personal circumstances but hopefully these articles will help you ask the right questions.

Asset protection would have to be one of the most boring, tedius issues to deal with for any business but it is also one of the most important. There are obviously different legal levels you can go to protect your assets but I'll propose a simple structure that may work for you.

I believe that the first thing that every domainer should do is assume that they will be sued by someone at sometime. I pray it doesn't happen but only the paranoid survive. This mentality really focused my attention to do something about my own assets.

The first thing that I did was ensure that no assets of any value were in my own name. If you are running a domain business in your own name then you are potentially putting at risk every other asset that you control or own. I'm not a lawyer but that statement sure doesn't sound like fun.

The aim of the game is then to own nothing but control everything. A simple way to do this is to ensure that your domains are held in a trust structure with a company as the trustee. The company should not trade or do anything other than be the trustee of the trust. This means that the domains are legally isolated from you personally. The assets of the trust can be sued but not yourself.

A nice by-product of this structure is that you are able to split your income to beneficiaries of the trust (eg. wife, kids etc) and thereby minimise your tax payable.

The next thing that you may want to do is to protect your domain assets from each other. You don't want your "good" domains that bear little legal risk to be mixed up with any more dubious domains. You may want to duplicate the structure and split the risk profiles apart. Although not strictly necessary I would recommend that you have a completely different company as the trustee of the second trust.

So let's imagine that you get sued for having a trademarked domain from a company that you've never heard of before from the other side of the world. The most that they will get is the assets in any one particular trust which means it's also always a good idea to ensure that neither trust accumulates a lot of cash. Regularly declare a disbursement to the beneficiaries as the cash comes in. If for some crazy reason that you are personally sued, you don't have any assets either as they should be held by either another legal structure or a very trusted person. Always ensure that you're the poorest guy in town.

Like all things in this area ensure that you get some good advice.....and always keep on asking the questions!

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