Protect your business assets with insurance, smart management, and diversification. But it is important to protect your assets just as much.
Being a business owner comes with lots of responsibilities and risks. As a business owner, your assets can be at risk. Keep reading for asset-protecting tips.
Diversify your legal instruments
The first step is to separate your business from your assets. Your business should be a standalone company throughout the type of entity your business will be.
As a sole proprietorship and general partnerships, owners become liable for any company debts. Creditors will be able to claim lawsuits on your personal and business assets. For more precise protection look into the benefits of an S or C corporation or a limited liability company (LLC). S corporations are when a shareholder can be liable for the money invested in a certain business. This prevents creditors from being unable to seize personal assets. For C corporation or LLC, it limits the legal liability for shareholders and workers.
Take note that corporate documents should be created and drafted by legal attorneys. These documents should be easily accessible and available in time-sensitive events. There are important factors like paying fees, holding meetings, keeping minutes that are a part of maintaining separate financial accounts.
Add another layer
If there is a property that the business owns, there is a second layer of protection you can seek. If there are injuries or damages that anyone experiences, you are protected with an LLC with strict separation of personal assets. An attorney is going to be a great resource to determine if this strategy is beneficial to you.
Insurance is a must
Someone seeking monetary compensation due to damages or injuries can pursue the money through insurance rather than the business itself. Study the different types of insurance to know what is best for your business. There is a variety of insurances like rental, retail, property ownership, etc. An insurance agent can be a good resource for you to have protection for years.