Although it still does not appear that any charges have been filed out of the Feds raid on National A-1 offices a couple of weeks ago, that event does take me back to the basics, back to the time I practiced law.
When I used to practice law and a client with an existing business came into my office with a new idea for a new business, one of the first things I would tell them is to seriously consider starting that new business in a separate entity, be it a corporation or LLC.
The problem with operating several businesses under the same entity is if one runs into problems, be they legal, financial or otherwise, all other business in that same entity can be effected, the assets of the non-problematic business can be affected or lost.
In the case of National A-1 it seems that the same company owned, in addition to a lot of domains, operating business(es) as well including HotMovies.com which is an adult site, serving up adult content.
Mr. Berryhill and attorney who I greatly respect commented on another post on TheDomains.com about National A-1:
“”What surprises me is how many different unrelated lines of business A-1 has consolidated under one roof.”
“If you are have one business that sells discount fuzzy puppies to children, and you have another business that sells bongs and rolling papers, then you might want to think about whether you want to do those two things as one business operating in one facility.”
John brings up a good point, besides operating different businesses under different entities there are other issues to be concerned with including sharing office space, employees and servers.
So the issue is more complicated that it would appear and the answer maybe more complex than just having separate corporations owning separate businesses, while it is imperative that you get your own legal advice.
I have no details about how National A-1 organized their business, but it seemed when the raid occurred many domains, adult and non-adult went offline.
I see a lot of domains owned by National A-1 the same company that is listed as the registrant for HotMovies.com.
Although Escorts.com, a site that some news stories say was the subject of the raid on National A-1 is not registered to them, the business seems to operate out of the same building as National A-1 and resides on National A-1 servers.
The point is if your going to operate mulitple businesses, )not just serving up landing pages), you need to consult with an attorney and organize your affairs in a way that protects one business from the liabilities of another.
We of course hope everything works out well for National A-1 but the bigger picture, it that if your running multiple businesses you need get good legal advice on how to organize your affairs.
How do you feel about the same company that runs .ORG running .XXX ?
…
aka Afilias which is located ???
Jim
Afilias performs back end services for registries, that is actually one business providing support for many registries, personally I don’t see any issues.
@MHB
If Afilias datacenters are seized because of .XXX and .ORG is carted away in the process, will people be concerned ?
If Afilias IP Address blocks are de-routed because of .XXX how will that impact .ORG owners ?
Have .ORG owners been informed they will be subsidizing .XXX ?
Lastly, do you favor the new CloneZone DNS feature for .XXX mapped to .ORG?
…existing .ORG owners would also have a .XXX to operate
I guess a convenient, easy route would be for a multi-business owner to separate different lines of businesses into distinct LLC’s? Someone recently wrote about treating each premium domain in their portfolio as its own business (incorporated separately).
Are their any tax advantages to selling a “company” (in essence a premium domain name held within an LLC) vs. selling the same domain name outright?
Jim
Afilias provides registry software services for ICANN accredited extensions.
They do not operate adult sites nor do they host the material.
You are barking up the wrong tree
Max
You raise some interesting points and issues.
Again I cannot give specific legal advice and everyone situation is different, but I did want to let everyone know and use National A-1 present situation to demonstrate the importance of getting good legal advice to structure your affairs in a way that best protects your assets
“barking up the wrong tree”
…
or
…
Selective Hearing
makes sense to me.
HEADLINES: ” ICANN PROMOTES PORN”
AN INTERNATIONAL BACKLASH …
… OUTCRY…
Could devastate ICANN for good.
REMEMBER: The UNITED NATIONS wants this Global Watchdog
postilion, this would give them one more reason to validate that
ICANN has poor insightful reasoning skills.
Will ICANN make a mature judgment call?
and…. REJECT APPROVAL… of the .XXX application,
in the end. ( no pun intended)
If ICANN has any sense of political survival against
there already eroded reputation, as the global
community watchdog. They will know what to do!
My guess pirated porn and file sharing
They are really clamping down due to
producers who got a court order where not only the business is liable but they must give up the viewers or file sharers id and they will go after them. They raided and shut down limewire last week.
To diversify or specialize, tough question.
Moral of the story is whenever you are working with porn, you better have GREAT lawyers.
Porn and escorts are trouble, just ask Craigslist.
So I agree with Fager.
Get good lawyers and absolutely run them 100% separately
M. Menius – Yes, there are tax advantages for the seller in selling a company vs selling a domain. That is one of the reasons I sold my Bored.com as a company instead of just the domain. I treated it as a capital gain, like selling stock, as opposed to regular income. See my blog posting about the sale at
http://www.impulsecorp.com/the-psychology-of-a-multi-million-dollar-sale for details.
But, I also am like National A-1, where I run adult sites, regular sites, and even sites for kids. But, I don’t actually have any real content on my adult sites, I am just an affiliate for other sites, so there is a lot less risk.
I used to have my adult domains setup as a separate company, even though I am just a one man operation, but after a few years I switched it back after I sold Bored.com because it was a hassle. When I owned Bored.com, I was mainly worried about losing that if I had legal problems, but once I sold it I did not have as much left so I was not as worried about having it all in one company.
All that being said, being lazy about it is not a good excuse, and separating it into 2 companies is certainly the best way to do things.
Some good insights, I really appreciate your thoughts.
It appears National A-1 was trying to contain costs, but when the stakes of the game are that high, it seems to be worth some extra expense and planning so the whole pot of gold is not put at risk.
@Eric – “I sold my Bored.com as a company instead of just the domain”
Thanks Eric. I read about the sale. Will be thinking further about creating a distinct LLC. Capital gains tax (vs. income tax) implications are obviously an important consideration.
Also, I think I actually have more liability from my non-adult domains, since I do a lot more active things with those, even though nothing is particularly risky. My thinking in splitting my company into 2 different companies was that if one business got sued and lost “everything”, I would at least have 1/2 my business left (whichever 1/2 was not sued).
People should also look into getting personal liability insurance, which you can get for around $1000 a year for $2 million – $5 million in coverage, which covers you getting sued personally like for a car accident or other personal things, above your normal insurance level (you might only have $100,000 coverage normally for example). Otherwise, if somebody sues you personally and you lose they could take your business if you don’t have the cash to pay. Being incorporated does not protect your from any of that.
Eric
You can have more than liability from law enforcement.
You can just have a business that runs up a ton of bills or causes injury or damages not covered by insurance which could jeopardize the other businesses if they are all in the same company or even share offices, employees and/or servers.
MHB – Yes, I totally agree, I should have things separated into 2 companies, and I used to do that, but I don’t anymore because I am too lazy to deal with it. I don’t have business insurance, because like you said, there are many things it does not cover.
But, aside from all of that, it is still good to have personal umbrella insurance, because no matter how careful you are with your business you could lose it all if you get sued personally.