ASSET PROTECTION IS NOT JUST FOR THE RICH
There is a often a misperception that asset protection is only for rich. This is not the case. Every business owner should give consideration to asset protection. In fact, asset protection strategies are generally inexpensive compared to the potential liability.
The best time to consider asset protection is when you start your business. The first way to protect your assets is through insurance. Two typical and necessary business policies are general liability insurance and workers’ compensation insurance. In certain instances you may need other coverages, endorsements or riders depending on your particular situation. On the personal side you may also want to consider an "umbrella" policy in addition to your home and auto insurance.
The second way to protect your business is through business structures such as a corporation, limited liability company (LLC) and limited partnerships. These business structures are generally afforable for almost every business owner. In fact, if you cannot afford to set up a limited liability structure for your business you should perhaps give a second thought as to whether you have enough capital to be in business. Certain advantages these structures provide include:
1. Protect Your Personal Assets From Business Liabilities
You can conduct your business while protecting your personal bank accounts, home and other personal assets from claims against the business. Sole proprietorships and partnerships do not offer such protection.
2. Protect Your Business From Personal Liabilities
You can also protect your business from personal liabilities. Imagine you lost a significant personal judgment. Having a business structure with limited liability will separate your business assets from your personal finances. This makes it more likely that you will be able to continue your business operations without interruption even though you have a personal judgment. Without a limited liability business structure in place your business assets are left open to the creditors of the personal judgment.
Please click here for more information on protecting your assets by incorporation or LLCs.