Rick Lover


Basic Information Sheets Recognize The Risks and Costs Of An Investment. How risky is an investment? What performance does it promise? What is the EU regulation?

The essentials in brief:

  • The aim of the EU regulation on the basic information sheets is that you can better compare different investments with each other and make better decisions.
  • The market watchdogs looked at information sheets from various providers. The result: the information can be misleading. So they don’t always help with a decision.
  • We show where traps lurk.

As a small investor, you are faced with a complex range of different investment products. But where is the money safe and secure, where are high returns possible? A look at the information sheets of the providers should help. The aim of the regulation is to better inform private investors about the risks and cost structures of the different products and thus to increase comparability.

Packaged investment products: when does the information obligation apply?

So-called “packaged investment products” for small investors are affected by EU regulation. These are investment and insurance products for which your repayment claim may be subject to fluctuations, i.e. the value of other assets is subject to changes. These include, for example:

  • structured financial products such as certificates or warrants
  • other insurance investment products such as unit-linked and index-linked life insurance
  • from 2020 also public funds

Uniform key information sheets: what must be in them?

To ensure that key information sheets are as uniform as possible, the PRIIPs Regulation contains binding provisions on form and content.

Formal requirements:

  • The key element information document must be given to you before you sign the contract .
  • If you wish, you have the right to receive a printed version .
  • The document must be entitled “Key information sheet” on the top of the first page .
  • For a better overview, a key information sheet may contain a maximum of three A4 pages .
  • All information must be precisely formulated and prepared in an understandable manner.
  • The key information document must follow a question style (for example: ” What kind of product is it?”).
  • The provider must publish the documents on his website and keep them up to date .
  • If a provider does not adhere to these information requirements, you should be careful. You can then also inform the responsible supervisory authority Bafin or the consumer advice centre.

Content requirements:

  • Information about the product type and the essential characteristics
  • Objectives of the product
  • Information on the opportunities and risks of the product
  • Pay particular attention here! Because with investments with high possible returns you can often just as quickly lose money. If you want to invest in risky investment products, you should be able to afford defaults.
  • Cost: direct and indirect costs, including one-time and recurring costs
  • Investment horizon: information on the investment period for which you have to spare money.
  • Your options to complain

Suitable performance scenarios: for example the estimated annual average return for different maturities. Caution: As a market watchdog study shows, this is not always a realistic aid. If the investment has performed unusually well over the past few years, the example calculations can look impressive. But that doesn’t mean that things have to continue to run as well in the next few years. Strong fluctuations are possible with some investments.

Situation in the event of a bankruptcy of the provider. Various companies issue profit participation rights, bonds, subordinated loans or similar forms of investment in order to raise capital. Consumers can invest their money by purchasing these financial products. Occasionally these companies get into financial difficulties and have to file for bankruptcy. In the following, we explain what the general situation is for investors in the event of bankruptcy.

Basics of bankruptcy proceedings

In insolvency proceedings – to put it simply – the company’s existing assets (warehouses, machines, own claims, goods, etc.) are used to pay the claims of the creditors (employees, investors, banks). Usually, this is done under the direction of an insolvency administrator.

Often the assets are not sufficient to meet all demands. Therefore, creditors must expect losses.

The course of an insolvency procedure

Business media often first report economic problems and possible bankruptcy. If bankruptcy can no longer be averted, an application is made to the court to open insolvency proceedings. Reasons for this step can be insolvency, impending insolvency or over-indebtedness. This begins the so-called “preliminary insolvency proceedings”. During this stage, the proceedings, the bankruptcy court is obliged to take precautions to secure the debtor’s assets. This is done, for example, by appointing a preliminary insolvency administrator.

This is followed by the actual insolvency proceedings, which begin with the so-called “opening resolution”. There are now various options in the process. On the one hand, it can end in the company’s liquidation. In this case – to put it simply – the company’s existing assets are used to pay the claims of the creditors.

On the other hand, an attempt can be made to continue the company as a whole or at least parts of it. This can be done, for example, through an insolvency plan. Put; this is a contract between all creditors in which they agree on the terms under which the company can continue to operate. In particular, it will decide on the (partial) waiver of claims.

To ensure a fair distribution of the remaining money for everyone, the outstanding claims of all creditors against the company are collected and recorded in the insolvency procedure. This collecting and recording of the claims is legally called the “registration for the insolvency table”.

If that happens, investors have to take action and register their claims. The insolvency administrator usually sends the required documents and information on the next steps by post. During the preliminary insolvency proceedings, the registration of claims is not yet necessary and would have no meaning.

The creditors’ meetings

In the course of the proceedings, the insolvency administrator sets a date for a first creditors’ meeting. On the, he usually provides information about the company’s economic situation. In addition, decisions on the progress of the procedure are made there. These include, for example, the commissioning to draw up an insolvency plan and the election of the members of the creditors’ committee. Investors have voting rights and can thus help determine the future development of the company.

In further creditors’ meetings, for example, the insolvency plan (drawn up by the insolvency administrator) can be voted on. Participation in the meetings is not mandatory. Investors who do not want to participate do not have to be represented by another person. However, important decisions about the future of the company can be made at the creditors’ meeting. Absent investors can also be bound by it.

Investors who are unable to attend the meetings for technical or time reasons can be represented. It should be noted, however, that the authorized person is authorized to appear and vote on behalf of the investor. The declarations made by the representative are binding for the investor.

Only grant power of attorney if you trust the authorized person. Powers of attorney already granted can be revoked. The authorized representative may then no longer act as your representative in the future.

Investor losses

It is difficult to predict what losses investors will expect in the event of bankruptcy. The insolvency administrator often comments on this after having obtained an initial overview of assets and debts. But this is also only an estimate. Possible subordination: Roughly speaking, the total assets of the debtor are collected in an insolvency procedure and distributed among all creditors. However, not all creditors are always treated equally. In some investment conditions, there is a so-called subordination. This means that only when other creditors, who are to be treated with priority, have received their money in full, the creditors in the lower ranking receive their money. Suppose there is still something left. How high this remainder is or whether the subordinate investors get nothing at all cannot be said with certainty.

Duration of bankruptcy proceedings

Insolvency proceedings can take several years. As a rule, investors are informed about new findings by the insolvency administrator and, for example, invited to creditors’ meetings.

Sale of the investment

Often profit participation rights, bonds, subordinated loans or similar forms of investment can be sold to third parties. Some of them are even traded on the stock exchange; however, stock exchange trading can be suspended in the event of bankruptcy.

Whether a sale or a transfer to third parties is permitted at all is regulated by the investment conditions that the consumer generally received when purchasing.

If the sale is possible, investors face a major problem: They have to find someone who – despite the (impending) bankruptcy – actually buys the investment from them at an acceptable price.

Foreclosure against the company concerned

In general, if creditors want to enforce a claim (e.g. for damages) in court, they can first sue. With a judgment based on a lawsuit, the creditor can then pursue foreclosure. This means that he can force the debtor with the help of the bailiff to pay the sued monies. It is also conceivable to apply for a dunning notice. For the time being, a court will not issue any judgments required for enforcement. Even if investors already have a judgment in their hands, individual foreclosure measures by judgment (or payment order) are no longer permitted after the opening of insolvency proceedings.

Even in the preliminary proceedings, the insolvency court can prohibit or stop individual enforcement measures.

Legal action against third parties

Since creditors often only receive minimal amounts in insolvency proceedings, alternative counterparties are often sought. This can be, for example, the company’s managing director who filed for bankruptcy too late and thus made himself liable for damages.

If the investment was made based on incorrect advice – for example, from a bank or financial service provider – this can also result in claims for damages.

Investors should always keep in mind: A lawsuit is still fraught with certain risks! If you lose the process, you have to pay the court and legal fees yourself. Also, all other investors have the option of filing a lawsuit. For some defendants (for example the managing director mentioned) a large number of cases could bring them to their knees very quickly, which in turn makes it less likely that all plaintiffs will be successful. Acting quickly can be beneficial, but there is no guarantee that you will get your money.

NOTE THAT! Investors should, therefore seek advice from a lawyer before filing a lawsuit.

Beware of exuberant promises

Investors should exercise particular caution when lawyers promise them sure success in court or in pending insolvency proceedings, for example on the Internet or in any other way. Investors can obtain information from the local bar association about lawyers who are particularly qualified in the field of investment.

Further consumer rights in case of company bankruptcies

Consumers cannot be affected by bankruptcy just as investors. Likewise, for example, the seller or manufacturer of a purchased product can file for bankruptcy. In this case, numerous questions arise over and over again – for example about prepayments, defective products, hire purchase, data protection and vouchers that have not yet been redeemed. Our information on consumer rights in the event of corporate bankruptcies provides the answers.

Are sustainable investments always unsafe?

The bankruptcies of companies whose business fields include the energy transition or renewable energies have recently received special attention in the media. Participations in such companies are a form of climate-friendly or sustainable investments. Certain ethical, social and ecological criteria are taken into account for sustainable investments. For example, the manager of an equity fund is instructed not to buy shares in companies in the nuclear industry. With the exclusively climate-friendly investments, the focus is accordingly on protecting the climate. From climate savings certificates to sustainable investment funds to closed investments in wind farms, there is everything in the area of ​​this investment that also exists in the area of ​​classic financial investments.

With sustainable and climate-friendly investments, the palette ranges from “very safe” to “high risk”. Such investments are therefore not always unsafe or risky.

Those who invest wisely in the stock markets can hope for significantly higher returns. Those who invest wisely in the stock markets can hope for significantly higher returns.

The essentials in brief:

  • In times of low-interest rates, stocks can be a high-dividend alternative for your investment. However, stocks are subject to strong short-term fluctuations and therefore, also harbour a higher risk of loss.
  • The following applies to stocks and investments: Don’t put all your eggs in one basket. So don’t bet on one or a few stocks, but spread your stock portfolio widely.
  • We explain which investment strategy there is with one or more equity products and what is worthwhile for you when.

To be able to build up assets in the long term despite the current low-interest rates, many investors rely on stocks. A typical mistake when investing money in stocks, however, is a lack of diversification in the stock portfolio. On the other hand, if you invest wisely in stock markets, you can hope for significantly higher returns. We explain why broad equity diversification is worthwhile for you and what potential index funds have for your investments.

Shares: Rapid Losses And Price Increases

The history of the stock markets shows: the bottom line is that the long-term average returns are around four per cent higher annually than with safe investments. These include, among other things, a savings or call money account. If you want to invest in stocks, you should be aware that intermittent losses of up to 50 per cent are just as average as rapid price increases.

Spreading Risk Is The Best And Only Remedy Against Excessive Losses

The same applies to stocks as to investments: never put everything on one card! Unfortunately, so-called financial advisors still violate this rule far too often by selling their customers products that are too risky! The advantage of risk diversification: sometimes the stock markets are doing well, sometimes there is a lean period on the stock market for ten or 20 years. Then it is good to have substantial interest income from safe investments. If you want to buy stocks, you should therefore not rely on individual stocks and invest in one or a few stocks, but rather diversify your stock portfolio. That lowers your risk of losses.

Index Funds: Broadly Diversified In Equity Markets

One way of spreading risk is the so-called investment funds, especially index funds, because this contains a large number of different individual stocks (interest-bearing paper, shares, real estate).

Index funds (also called  ETFs, Exchange Traded Funds ) map the development of stock markets worldwide. They are a rock-solid investment and are also well suited for retirement provision. Note, however, that ups and downs are unavoidable even with ETFs.

Risk Diversification In Stocks: Tips For Buying Index Funds

The cheapest way to buy index funds is through a direct bank. Index funds are not actively offered in the branches of banks and savings banks and by financial distributors because there is no adequate commission for the broker. If the independent search is too complicated for you and you need advice, speak openly with your intermediary about your concerns. There are also other globally diversified funds in the range of the consultants, which are more expensive but are often sold for a commission. In this case, at least negotiate the front-end load to reduce costs.

The independent financial experts at the consumer advice centres will also help you find the right investment for you.

DUBIOUS STOCK OFFERS: Warning against calling dubious stock traders

Beware, dubious stock traders have been looking for customers for a long time! The market watchman experts at the consumer advice centre Hessen warn of unwanted advertising calls from alleged stock traders. Shares from well-known companies – including Lufthansa, Siemens, Tesla and Amazon – are offered to consumers for purchase by telephone.

With direct investments, you become a co-owner of shipping containers, real estate or solar systems, for example. However, providers do not provide sufficient information about the possible risks that you are taking with them. What matters when it comes to direct investments.

The essentials in brief:

  • Providers are obliged to point out fluctuations in value, liability risks and your obligations as the owner in the sales prospectus. But that doesn’t always happen.
  • It is, therefore, not always clear to investors that direct investments have unique risks. You can lose all of your money with this type of investment.
  • Before making a purchase decision, find out about the potential risks and read the product information carefully.

With direct investments, you invest your money directly in real assets – for example, in solar systems, tree plantations, wind turbines, real estate or shipping containers (so-called grey capital market). Your investment will make you the full or partial owner.


As the owner, you acquire property that has already been rented. You rent or lease these for a period of time agreed in advance with your contractual partner and collected the monthly rental payments during this period. After the contract period has expired, you sell your shares again at an agreed residual value. You may not get back as much money as you spent on the purchase. But with the rental income, the investment should still pay off. Typical examples are:

Freight wagons or shipping containers:

With the direct investment, you become (part) owner of wagons or containers. Often these are already in use, for example when a logistics company uses them to transport goods.

Tree plantations:

With the direct investment, you become (part) owner of trees or forest areas. You have to pay for the rearing and further cultivation of the area and collect the sales proceeds from the upcoming harvest. The trees sold are said to bring you more money than the cost of buying the young trees and growing them.

Wind turbines :

With the direct investment, you become (part) owner of an active wind turbine or a group of wind turbines. However, such systems are expensive and take many years to refinance. With the direct investment, you regularly collect for the electricity fed into the grid that the wind turbines produce. It is similar when buying real estate whose rental income is to be paid out to you.

Liability Risks Are Often Not Adequately Explained

Direct investment advertisements like to emphasize how safe and sound such investments are and downplay the risks. An investigation by the market watchdog shows this. The risks arise, among other things, from the fact that you become a (co-) owner.

To be able to make the decision for or against a direct investment, providers must inform you in sales prospectuses of potential liability risks, obligations and fluctuations in value. However, the information documents often do not sufficiently point out the far-reaching risks and the obligations for owners – sometimes not at all.


Direct investments often score with fixed payouts and manageable terms. However, as with any form of investment, direct investments are associated with risks. Up to a total loss, because you can lose all of your money with this form of investment. As an investor, you can also have various types of financial obligations:

  • If you become the owner of a forest property through a wood investment, there is a risk that you will suffer a total loss if the wood harvest is destroyed. As a property owner, however, you still have to pay for duties and taxes and possibly also for property maintenance.
  • Buyback by the provider is not guaranteed. Suppose the contractually stipulated buyback does not take place, for example in the case of a container because the company is insolvent. In that case, you as the investor must endeavour to sell it yourself. If you need a broker or agent for this, additional costs arise.
  • Suppose there is no income from your direct investment. In that case, you as the investor are still liable for the maintenance and care of the investment property: In the case of a tree plantation, for example, additional costs can arise from the use of staff to manage the property. Port fees may apply to containers.
  • The consequence of liability: As a (co-) owner, you may have to make payments that exceed the invested capital (obligation to make additional contributions).

P&R container firms go bankrupt


Due to the risk of total failure and the long terms, this type of investment is usually only suitable for experienced investors. If you still want to invest in direct investments, you should consider the following tips:

  • Find out about the potential risks associated with your investment before investing in indirect investments. The independent advisors of the consumer advice centres will also help you with this.
  • Read the product information carefully.
  • Take the warnings in the sales prospectus and information sheets seriously. Get suspicious if there are no warnings at all.
  • Ask if anything is unclear.
  • Don’t sign anything you don’t understand.

Have you ever experienced it? Usually, on the phone, a friendly voice answers: “We are currently surveying the subject of saving taxes. This will certainly be of interest to you too because you must also believe that you are paying far too much tax. We have there an interesting offer and would like to make an appointment … “

Anyone who accepts this does not invite a survey institute to come to their home, but rather experts in sales of financial products.

What is a “Financial Advisor”?

The term “financial advisor”, sometimes garnished with the addition “independent”, is sonorous. It promises what many are lacking: sound advice on financial matters that is geared solely to the well-being of the customer. Quite often, however, only hot air comes out, according to the motto: What is sold is what brings the highest commission. Anyone who thinks that a “financial advisor”, “asset optimizer” or “money expert” always has a bright head is making a big mistake.

How does a dubious financial advisor establish contact?

The first contact is often made without prior notice over the phone or at the front door. Unsolicited offers by email are also becoming increasingly popular. Contacting us without prior consent is prohibited by law. However, since disregard of the prohibition is rarely prosecuted, dubious financial advisors are not put off by it. Serious providers do without unsolicited phone calls. You only call them if there are already contractual relationships.

Checklist: How do you recognize dubious financial advisors?

The initial telephone contact takes place without a request from the customer.

  • Terms such as “optimize old-age provision”, “save taxes” or “risk-free” are used as “decoy”.
  • Customer questions are often answered with counter questions, and moral pressure is applied (“Do I look like I’m lying?”).
  • The “friendship scam” is supposed to create trust, something like this: “Your work colleague/sports comrade recommended that I ask you whether you also want to save a lot of money every month.”
  • High returns without risk are promised. But: the higher the return, the greater the risk!
  • Only verbal promises are made about the security, return and duration of the offers. Attention: If these promises are not fulfilled, there are problems of proof. Therefore always make promises in writing!
  • Existing investments are poorly made, and you are asked to terminate them.
  • The considerable costs of sales, preparation of prospectuses, administration and brokering of bank loans are kept secret.


There is pressure to sign contracts quickly. But: investment products are a dime a dozen. There is no rush! A sales prospectus is only handed over after the contract has been signed – often after the withdrawal period has expired.

How does the financial advisor make his money?

At the expense of the customer! Most “financial advisors” work as independent sales agents on a commission basis. The more and the more expensive products are sold, the brighter the cash register rings.

Whether the product fits the customer is not decisive. It is not uncommon for the conversation to be directed towards a single offer anyway. The focus for the “consultant” is the quick conclusion of a contract because time is money.

Are there reputable financial advisers?

Yes, typical features are that you give the customer enough time to study the documents relating to an investment carefully and recommend that you obtain a second opinion, for example from a consumer advice centre or a tax advisor; they have no problem with confirming and delivering the essential facts in writing; they expressly state that the contract can be revoked within 14 days if there are doubts about the decision after the conclusion of the contract. Never enter into contracts with financial advisors who want to get in touch and talk about monetary matters without prior agreement; come up with the “friendship scam” and press for a hasty conclusion; promise high returns without risk and an exit option at any time; only make verbal commitments.


Company succession options. Succession is a topic that typically arises in medium-sized companies. The entrepreneur as owner and managing director often shapes the picture there. In such companies, the question of changing staff has to be settled at some point – if only for reasons of age.

In the majority of cases, succession in the family is still preferred. The handover to the son or daughter is often ruled out – due to a lack of interest, skills or simply because there is no family successor. Then another solution has to be found. Whether in the family or from outside: every company succession is a complex process that requires know-how and expertise. Good advice from outside is required.

Successor From The Company

If family succession is not an option, it makes sense to first look around among co-shareholders or employees for possible successors. The advantage is: “Candidates” like this are connected to the company, taking over the management is comparatively smooth – “they know their way around”. If the company is sold to its managing directors or executives, one speaks of a management buyout (MBO) – a variant of the internal handover.

The often weak capital base of the buyer poses a problem with internal company successions. It is, therefore, essential to find sustainable financing solutions for the purchase price. Public funding can also be used.

External Succession Solutions

External succession is used when the company is sold to third parties. There are different possible buyer groups:

  • Management Buy-In (MBI): Buyers are people with management know-how who want to lead and develop the company themselves. It is not uncommon for self-employment to be achieved through an MBI.
  • Strategic investors are most other companies, often competitors. The purpose of the purchase is to improve one’s market position, use synergies or expand the product range. The advantage: strategic investors are often particularly financially strong and pay prices that go beyond the pure company value.
  • Financial investors: above all want to make a profit. After a temporary commitment, the company is to be resold with “added value”, possibly also by going public. Some financial investors target incredibly lucrative parts of a company; the rest are sold off. Breaking up is also an option.

The Alpha And Omega: Good Preparation Whichever form of succession is chosen, it requires foresighted and early preparation. With the handover, there is a comprehensive need for legal regulation. Tax aspects play an essential role, as do inheritance and corporate law issues. The company cannot only continue with the handover – the motto “keep it up” does not work. It almost always requires a realignment. In many cases, a smooth transition is recommended, in which the senior entrepreneur will remain at your side for a while. A well-prepared succession is an essential requirement for the company to have a future

Life has surprises in store – real estate financing should also be prepared for this: important basic rules.

The dream house or the perfect apartment has been found and the time to buy is good thanks to even lower interest rates. If you buy your dream property now and tie it to a loan for years, you shouldn’t act too quickly – but adapt everything to the circumstances of life: with financing that offers enough flexibility. Due to a lot can change over around 20 years: First a double-earner couple, then perhaps maternity leave and then part-time. Or: a surprising inheritance or career leaps that are associated with salary increases. But periods of illness or even an occupational disability are possible, which should be specifically covered.

Important basic rules for flexible financing:

  1. Set the initial repayment at least two per cent. When financing owner-occupied real estate, loans with annuity repayment are usually suitable, that means: The monthly annuity instalment to be paid consists of interest and a repayment component, which remains constant during the fixed interest period. The repayment portion increases during the financing period as the interest burden falls. The higher the borrowing rate, the stronger this effect. To ensure repayment of the loan in a sustainable period, at least two per cent repayment should be planned because of the current low-interest rate; Many banks are now even assuming this proportion.
  2. Agree on a repayment rate change: This way, changes in the household budget, such as parental leave or part-time work, can be cushioned. Example: Lenders often allow up to three repayment rate changes during the fixed interest period, mostly between the percentage of one and five of the loan amount.
  3. Agree on outstanding repayments. One-off payments accelerate debt relief: the reduced loan amount reduces the interest portion of the repayment instalment – and the repayment portion increases. Free outstanding repayments of five to ten per cent of the loan amount per year are common, often limited to three outstanding repayments during the fixed interest period. Suitable for bonus payments, inheritance or a more enormous amount of freely available money.

Real estate purchase still in planning?

If you want to take your time with your own home, you can secure the current interest rate with a home loan and savings contract as a basis for later financing. Home loan and savings contracts generally allow many design options up to the point at which the loan is drawn down. In the building society loan phase, there are usually unlimited unique repayment options. State funding can also be used. The details are particularly important when it comes to lifelong financing like homeownership.

If you would like to increase your wealth in the long term, you have to align your strategy accordingly. Asset accumulation is an individual process. However, asset accumulation is not just about finding the right product. “You have to deal with your investments in general and find your strategy,” says Trefz. These six basic rules will help.


If you want to increase your money, you first have to ensure that the substance is preserved. And that is usually the income. In the opinion of consumer advocates, absolute essential insurance protection, therefore includes an occupational disability and a liability policy. Everyone should also hold back a liquidity reserve for unforeseen incidents. The amount of which, of course, always depends on the needs and living conditions in the specific individual case.


Small cattle also make crap – the adage is true. Even those who can only save small amounts at the beginning of their working life benefit from it. Especially in the long term, this can turn into a handsome amount. This can be supported by intelligent account models in which money that is leftover at the end of the month automatically flows into a form of investment.


Everyone must first determine what they are saving for. Does he need the money in the short, medium or long term? It also depends on whether he has to be able to access the money flexibly or whether he can tie it up in a system for a few years. “The further the investment goal is, the more worthwhile it is to take a certain risk for a better long-term return”, emphasizes Trefz. Background: The ups and downs on the stock exchanges are balanced over a longer-term investment horizon.


Don’t put all off your eggs in one basket – that is one of the most important wisdom of the stock market. There is a simple consideration behind this: if one type of investment goes downhill, some of the money is still parked in other investments and can compensate for it. Good diversification of the investment forms is significant. Something can go into high-yield but riskier equity investments, another part is reserved for tangible assets such as real estate and the next part is covered, for example, through traditional pension insurance or bonds. The sum of the building blocks must result in a structure that suits the investor.


Despite all the variation, it is also essential: You also have to be able to sleep well. If certain asset classes are too risky for you, because you don’t trust them or you don’t understand the construct, you should stay away from it.

RULE NUMBER 6: TRUST PROFESSIONALS Those who would like to take advantage of the stock market opportunities, but are more of a layman themselves, can use the experience of professionals and, for example, rely on asset management funds.

There are only four states that allow anonymous LLCs. Therefore your options for these are limited. However, these states are also among the states with the simplest and cheapest incorporation processes.

Wyoming, Delaware, and New Mexico allow you to form LLCs, keeping your name out of public records. Keep in mind that these LLCs are obviously not 100% anonymous. The registered agent must always know who is behind an LLC and disclose this information to the state upon request.

  1. Delaware does not require a list of the names of LLC members and managers. Requires a registered agent to be listed, as well as the incorporator / organizer. To maintain complete privacy it is necessary to hire third party suppliers for these services;
  2. New Mexico does not collect information on LLC members / managers. There is also a complete lack of annual reports, commissions or fees. Similar to Delaware, you will need third party vendors to maintain complete privacy;
  3. Nevada and Wyoming both allow “appointment services”. When using such services, a nominee will appear in the public records, rather than the real owners.

Side note: Regardless of the state or setting you use to incorporate your LLC, When you wish to register for an Employer Identification Number (EIN), which is required to obtain bank and payment processing, you must disclose all information to the ‘IRS. However, the IRS will be aware of the beneficial owner of the company.

How to open an llc in the USA?

At this point, I will show you step by step, how to set up your LLC, receive the EIN from the IRS, open bank accounts remotely and finally how to get payment processing (Stripe) and Paypal, so you can start billing. your customers. The steps you need to follow can be summarized as follows:

  1. Decide the status of your LLC;
  2. Choose a name and compare it with your state database;
  3. Use a service provider to open the LLC and act as a registered agent;
  4. Apply for an EIN;
  5. Open bank accounts and request payment processors.

Requirements for forming and managing an LLC

Tax code for your company – ein: employer identification number

The EIN (Employer Identification Number) is a unique 9-digit number assigned to your company by the IRS. The EIN is used to identify a company for tax purposes with the IRS. Think of it as a social security number for your business.

This number is required to meet the formation requirements for your LLC. Having an EIN is also virtually non-negotiable when opening a bank account or applying for commercial accounts with payment processors such as Stripe or Paypal.

How to get an ein as a non-resident without ssn or itin

To apply for an EIN, you must complete the SS-4 form “Application for an employer identification number”. To get an EIN, you need three things:

  • A trade name;
  • A business address in the United States;
  • A brief explanation of the main commercial activity and the main product or service that the company will offer or sell.

Bank accounts for a foreign owned LLC

A company without a bank account is not a real company. In addition to receiving wire transfers, paying bills and invoices, you will also need a bank account to use for your business accounts and payment processors.

So one of the most important questions to ask is where and how to get good bank accounts. In the USA there are two categories:

  • Traditional banks, such as Bank of America, Chase, and so on
  • Neo-banks, like TransferWise

Traditional banks generally have higher requirements and internal compliance guidelines. Typically, such accounts cannot be opened remotely. The owner or manager of the company must appear in person.

Opening an account with fintechs and “neo-banks” companies is generally easier. Their KYC requirements are lower and there are several options that can be done remotely.

Remote account opening

As part of the Know-Your-Customer (KYC) guidelines, traditional banks will require that a company representative appear in person at a branch. However, there are some fintech companies that will allow you to verify without having to be physically present.

As of December 2020, there are three fintechs opening accounts with US bank details for non-resident LLC owners, remotely.

Opening US accounts in person

When you really move to the United States, opening accounts for your LLC becomes easy enough. There are literally hundreds of options available, including many of the big banks like Chase, Wells Fargo, Bank of America, TD Bank, and many more.

LLC to start a business while remaining in Italy: can it be done?

At this point in the reading I’m sure you are seriously considering a USA LLC for your business. Alongside the information I have given you so far, you must keep in mind that there are regulations in Europe (and in Italy) that bind resident subjects in setting up companies abroad.

In recent years, many digital entrepreneurs who do not have a physical place of business but work online have decided to open companies in the United States and manage their business from there. This, considering all the tax advantages that there are for non-resident subjects who decide to incorporate an LLC.

Since the possibility of opening an LLC is extremely easy, this has led over the years to give the impression that opening a company in the US and reducing the tax burden is, by and large, completely legal.

The problem of fictitiously incorporated companies abroad

You must know that if the company is fictitiously established abroad, that is, the company is foreign-dressed, you risk incurring a tax assessment from Italy. If you believe that it is enough to set up the company, open the registered office to operate from Italy and not pay taxes in the United States and in Italy, you are making a mistake.

In a situation like this, there are very significant risks on the Italian side, both for the foreign company and for the entrepreneur who manages it from Italy. In fact, should the Italian financial administration become aware of this situation, it would certainly have something to say about the company you opened in the United States.

This dispute would materialize in an assessment notice for tax inversion of the company, with the contestation of the higher taxes that have not been paid in Italy. These are penalties ranging from 120% to 240% (with an increase of 1/3 for foreign income) of taxes due and not paid in Italy.

It goes without saying that this is a very heavy dispute, if you consider that it can be applied for each previous annuity that is still ascertainable (in this case the last 8 years).

What to do to properly open an llc in the usa?

As you will have understood, opening an LLC in the United States is possible. However, you need to pay close attention to how you work. The risks I just told you about are concrete and real. For this reason I do not recommend improvising to set up a company abroad without the help of experienced professionals in this area.

Very often in the studio we are contacted by entrepreneurs who realized too late the risks they were running and once the Italian assessment notice arrives it is difficult to defend themselves. In these situations, it should be said, there is very little to do.

The planning of a business abroad is complex and cannot be replaced by a certainly commendable initiative, such as the one promoted by the USA.

If you find consultants who tell you that you can manage everything from Italy and open an LLC in the USA for your business, they are wrong. In this case either it is negligence, or it is a scam put in place just to sell you services that will not help you. In fact, if your situation turns out to be not regular, you will only have time counted before an investigation by Italy.

In our consultancy business for those who want to start a business in the United States, we certainly recommend that you consider opening an LLC. However, in addition to opening, you must take into account setting up your foreign company or corporate group in such a way as to avoid any type of tax dispute at a national or international level. Doing this is essential if you want to lay the foundations for a stable and growing economic activity over time.

Thanks to our experience, you will be able to understand where you are wrong in your business project abroad. At the same time we will explain to you how you must operate to be in good standing and we will be able to point you to valid consultants who can assist you in the daily management of your business.

If you want us to analyze your personal situation in relation to the possibility of starting a business abroad, contact us!

We will explain and support you in your project, even up to its conclusion if you wish. All of this, of course, in compliance with national and conventional tax regulations, so that you cannot risk seeing your projects go up in smoke for not having operated in the most correct and legal manner.

Frequently asked questions to open an LLC

Some of the most frequently asked questions about using an American LLC as a non-resident.

What happens if I sell products online and my web hoster is located in the United States?

No problem. Since you are renting the server from an independent agent (the hosting provider), you are not ETBUS (Non-US Entrepreneurs).

Do I need an address in the United States to incorporate a business in the United States?

LLCs must have a registered business address. This doesn’t have to be a real physical address. I recommend that you use a virtual address service for your business address. This is very useful when applying for EIN or opening bank accounts.

Do I need accounting for my LLC?

Even if you have no US income tax obligation and don’t register a 1040-NR, there are still record maintenance requirements for your LLC. Because you will be required to submit Form 5472, you will be required to maintain sufficient permanent books or records to establish correct information filed (Section 6001).

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