As a business owner, one of the things you probably realized fairly quickly was that there is so much more to running a business than just turning a profit. You also need to do everything in your power to protect it. One of the main goals of business asset protection is to significantly reduce or to totally eliminate any risk of losing assets to creditors or due to liability. Being aware of all of the potential pitfalls is definitely a good start to protecting your business assets. Moreover, you should be aware that there are at least three different occasions in which your business could definitely use asset protection.

In Case of Death

In the case of death, asset protection usually takes on the form of being able to draft a solid continuity plan for the business in the case of one of the leaders going through a natural death, a serious incapacitating event, or a shocking death.

This means that there are plans for someone to immediately take over the business in the event of the leader incurring a medical emergency. The business will be protected and will not lose money because without this plan in place, it could literally be months or even years for the courts to determine who should take over.

In Case of a Lawsuit

There is no question that a lawsuit can put a serious damper on the profitability of a business. However, protection exists, and it is usually in the form of making an LLC. A “Limited Liability Company” exists in order to separate your business identity from your personal identity. With an LLC, your personal assets are protected in the event that your business is sued.

Of course, that is only the start. Even with the formation of an LLC, it is important to make sure your business finances and personal finances remain fully separated. Any financial activities you do that are in regard to your business should be drawn on your company name or your company letterhead. Additionally, you should consider purchasing both business liability insurance and personal liability insurance that is equal to your net worth. Legally Mine points out that if your business is in the United States, the odds are high that you will be involved in a lawsuit at some point — 94% of the world’s lawsuits happen in the U.S. This is why you need business insurance.  

Necessity of Compliance

According to Western & Southern Financial Group, LLCs and corporations are subject to many rules, including the requirement to pay business taxes and state and local fees, filing specific documents, and maintaining accurate business records. Whatever your business structure might be, it is important that you stay compliant in all areas of the law. This means that your business pays all the relevant taxes. It also means that your business keeps all of the appropriate taxes. If you are not sure how to go about all of this, it would be money well-spent for you to hire an accountant to help you.

As a business owner, you have worked hard to grow your business. The last thing you want would be for a lawsuit to wipe it all out. This is why asset protection is important and why you should look into it.

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